OpenPredict AMA with FalconSwap

September 9th 2020 — Hatu from OpenPredict participated in an AMA with FalconSwap. Below is a report of this AMA

Tim | FalconSwap
Welcome @HatuSSS

Hatu
As Lorenzo is ill, he won’t be able to join today sadly :(
But I am happy to cover all the question that the community has in terms of our exciting partnership with Falcon

Tim | FalconSwap
Hope he gets better soon
Good to see you here
Let me put the group on mute and we can start the AMA

Hatu
Awesome
Shall I start off with a quick introduction of myself, and then move towards OpenPredict

Tim | FalconSwap
Yes please

Hatu
I am a partner at DAO Maker (daomaker.com)
We’re an established industry accelerator, with a track record of working with well-known large caps as-well-as very successful early stage developments of this year

This is a snapshot of our ecosystem
(Some enterprise projects cannot be named publicly but this is still comprehensive enough to give a good oversight)

OpenPredict is one of the few original concepts that we came across and were very excited to have it on our accelerator.

It’s led by the ex-lead developer at Zcoin, which has been around for many years and is well-present in the crypto space. Tadhg (the lead dev of Zcoin and now head of OpenPredict) built the zerocoin protocol upon Ethereum, built out state bridges for privacy, and enabled user-friendly UIs for it.

Such a level of qualification is hard to find but definitely showed the capabilities he had for achieving the goals of OpenPredict, which I’d like to dive into now.

Tim | FalconSwap
That’s impressive, DAO maker has earned respect in the industry for working on accelerating amazing projects which also saw a significant rise in the market.

Hatu
Thank you Tim
I appreciate the regard

Tim | FalconSwap
Can you share more details about Open Predict.
A lot of people wanted to know about what it does and how prediction markets work?

Hatu
Happy to!

OpenPredict is a DeFi protocol, but quite different from the standard. Rather than focusing on lending and trading, it’s aim is moreso on insurance and hedging.

It generates these insurance and hedging opportunities in the form of liquid options, which the crypto space has come to know as synths.

In a quick snapshot of key problems it addresses —

Problem 1:
Synths have low liquidity

Solution: One-on-one synths launched for speculation on price of anything. A trader and counter-trader are needed for initiation. Easy UI to be retail friendly (you can reference the images to see how easy it really is… just press a couple buttons on your phone).

Problem 2:
ETH in DeFi keeps going up but it remains volatile.

Solution: Insure against price volatility through put contracts provided by institutional traders that act as insurance firms. EurekaTrading, which provides the management and liquidity of ETFs on many top-100 exchanges is announced as the first “insurance firm.”

Problem 3:
Options are siloed so if you purchase one, it is held within the exchange you bought it in, so you are limited to the liquidity there.

Solution: There protocol mints these insurance put contracts as fungible tokens, directly to user wallet. So that means even if a person exits their ETH holding and does not need the insurance, they can sell it onwards.

So before they can address the insurance and hedging issue through liquid options (synths), they first need to make them liquid.

Tim | FalconSwap
Ahh I see
What is OpenPredict trying to achieve with its protocol?

Hatu
The current state of the market for synths is bizarre.
UMA, which is now over $1B in mcap, has one synth and that one synth has zero liquidity.

So essentially, UMA is a billion dollar idea, and idea alone.

Synthetix, meanwhile, would rival that $1B value with a bit of volume, but they issue incentives to the tune of tens of millions of tokens per year ($100s of mil USD) to generate couple mil daily volume.

Tim | FalconSwap
That project is currently on no 25 on Coingecko

Hatu
A billion dollar idea it seems

Tim | FalconSwap
Yeah

Hatu
The challenge is that synths are illiquid. So TrustPredict went down this issue in a simple way, all synths are generated 1-to-1.

Tim | FalconSwap
Synthetix have been popular lately but didn’t know that how much incentives they were paying for such volume, that would dilute the ecosystem as well if I am not correct?

Hatu
It indeed does, but the narrative took off just in time to soak up the dilution… for now

You can have story-driven projects
Or you can have problem-addressing projects, like OpenPredict and FalconSwap

You’re not relying on a story and are instead addressing a market need, which is the right way to address longevity

Tim | FalconSwap
That’s good to know

Hatu
Similarly, OpenPredict is targeting the need for insurance and hedging in the market. A good synergy between OpenPredict and FalconSwap is that the LPs FalconSwap attracts would also be exposed to down-side price volatility of assets like ETH.

Such hedging is common in CeFi but inexistent in DeFi.

How would it work?

Tim | FalconSwap
DeFi is pretty new space and can certainly evolve by taking the lessons from traditional markets.

Hatu
Definitely, and in fact there’s room to tie in major participants of CeFi into DeFi

ETH-based LPs tend to be long on ETH but are still exposed to volatility and steep drops, as was clear last week.

A key insurance-form option on OpenPredict is price volatility protection. This is common through put contracts in tradition finance, be it CEX traders or institutions at Wall street.

Tim | FalconSwap
Looking forward to that

Hatu
DeFi currently lacks this facilitation.

So, the OpenPredict option fills the gap.
The team is pulling in institutional traders to fill this opportunity in part. Essentially, these institutional trading desks provide the put options at a strike price in DeFi.

This is similar to paying a premium on price insurance.

The opportunity is clear: they get exposure to a new market where they can cross-trade their own positions. So the options are organic for these institutional desks, and at the same time convenient insurance for ETH longs in DeFi deposits.

Tim | FalconSwap
How will OpenPredict make sure the OPT token has enough utility and growth?

Hatu
One of the first desks, EurekaTrading, which handles $100M in crypto assets and ETFs, is the first one to be announced publicly. Several more will be announced per the calendar of details.

Tim | FalconSwap
Wow

Hatu
All contracts minted for insurance can have fee discount if the insurance buyers have OPT.

The growth of the ecosystem is tied towards making these options (commonly known in crypto as synths) touch more asset classes.

Tim | FalconSwap
I see that you are operating in such a big market, Why was the token sale only $250,000 with such a low initial valuation?

Hatu
The go-to for insurance is ETH as a large number of institutional desks trade ETH. The expansion will tie in wBTC, and LINK. The roadmap will expand more assets that achieve a high enough mcap.

The team wrote an interesting piece on this: https://medium.com/openpredict/601bcbe11cda

The project has been and remains primarily bootstrapped. The small cap was just a means to have a distribution, but without giving it away for free, just to avoid airdrop hunters.

Tim | FalconSwap
I saw you have a strong holder program that you used for token distribution for OpenPredict.
How did that work out?

Hatu
That’s a framework we (DAO Maker) offer
It went quite well with OPT’s intent of seeding a strong early community that aims to hodl tokens tighly.

The SHO (Strong Holder Offering) works like this:
A target token is chosen, one with a bustling community and a relevant product

We use our chain analysis tools to assess which of the holders that apply for the sale held their tokens, bought more, or became liquidity providers. The strongest among them are offered an allocation

So far, the results are quite strong as more than 75% of first buyers continue to hold every single token, despite the token’s returns being so high

(Wish we could have offered it to Falcon haha)

Tim | FalconSwap
I think that’s how the token distributions should be, that would give access to believers of the projects an early acces sin the project.
Gettiing back to Open Predict

Hatu
Right

Tim | FalconSwap
Looks very exciting
Our community is interested in knowing what core products will OpenPredict release in the future and when?

Hatu
Absolutely, and while Falcon has a great go-to market as it is a layer-2, OpenPredict has to seed the market for synths since much of the synths market is based on paying people to use the product

So the first launch is done through an called TrustPredict
It’s a lot simpler compared to advanced options for insurance and is meant to be more of a 1-on-1 speculative play among friends

https://openpredict.io/products/trustpredict-beta
An oversight of it (and the beta whitelist is live for those who want early access!)

It turns the launch of synths into a press of just 3 taps
That gets the market used to launching synths in a simple manner. This is how market seeding should be, and the mainnet for product 1 is next quarter, targeting early November

The feedback and user bae generated from it will be funneled to advanced synths, such as price volatiltiy insurance

Tim | FalconSwap
I am very impressed with the things you are building and truely believe that in order for DeFi market to mature, these things are needed to be implemented
Open Predict is one of the early movers in this space
And I see a lot of room for growth
Do you want to say something before I open the chat?

Hatu
Just going to add up on this point
There’s a definite need for more price-protective products. A lot of early users of DeFi are the highly risk averse crowd. Expansion of the market is hitting a point where people with less risk tolerance are interested.

For the conversion of this, much bigger segment of the population, easy to launch insurance is critical

Happy to have questions from the community

Tim | FalconSwap
Let me open the chat for the community members here
The chat is now open for the community

Question from Ivan
FalconSwap is an anonymous team, why did you choose them as your partner? What are the reasons that you think other investors should trust the FalconSwap team? Do you think FalconSwap could be a good product and why?

Hatu
Startups have to be nimble and must have an open door policy to synergistic opportunities. I’m going to answer this from the point of view of any startup.

Given the chance to have a mutually beneficial partnership with any project — anonymous or not — is an advantageous position. When granted such an opportunity, they can be overly cautious, but that’s an luxury granted to established firms.

It is the startup’s duty to make such beneficial partnerships and focus on its own development to keep its part of the agreement to its partner, and to keep its word to its community. It’s likewise the partner’s duty to deliver on their part and achieve the development goal. If either of the partners in an agreement do not achieve their development goals, then for the startup that entered the deal, and its associated community, it’s only a loss of a good opportunity that could have been had.

That’s all.
If it turns out great, perfect: it becomes a start for a great value-added proposition for two ventures. If it does not, then take the advantage of being small: on to the next meaningful deal!

With that said, there’s a great synergy between OpenPredict and Falcon and OPT’s products would allow price volatiltiy cover to Falcon’s users, and Falcon’s products would provide OPT’s user base a better trading environment.

That’s all that should matter to the two involved parties, there there is tangible value to be had. If either side does not deliver, then it does not change the path of either company.

Question from AP
Hi. What can we expect about the synergy when OPT and FSW became partners?

Hatu
Synergy stated in the message abov

Hatu, [09.09.20 17:05]
[In reply to Hatu]
I want to build upon this a bit
Any startup that receives a meaningful opportunity should be aborad with it. That’s what matters, willingness to have a joint move if the deliverables are ready.

They should not concern whether or not the delivery happens from the other side, and should instead stick with a focus on their own roadmap.

Question from Tyler [FalconSwap Revolution started]
How did you ear about FalconSwap?
Do you commun investors ?
Did you already collaborate on past with them?
Do you know about their previous project and background?
Are they reputable dev ?

Hatu
- From a mutual investor
- Yes
- No
- Only through conversation
- Their goal is strong, but we have not been able to use the product yet. Look forward to seeing it materialize

Question from to Zet Tia Chớp
Will using OPT to mine FSW affect the price of OPT and FSW?

Hatu
The value generated from the cross-product usage should grow the user base of both projects

Question from Cio werkewer
Investors seem to only care about the price of the token instead of the real value of the project, how does your team attract newcomers and keep members long-term with the project? What is the real value of $OPT?

Hatu
Tokenholders benefit as long as a project has a robust token economy, which OPT does. It’s involved in every product, either through accesspoints, fee discounts, or staking for reward distribution on product usage

Tim | FalconSwap
Thanks Hatu for answering the partnership questions.
It’s exciting for FalconSwap to partner with Open Predict as well. This is a mutually beneficial partnership and we will work from our end to deliver our side of the commitment to make this a success and beneficial for both OPT and FSW communities.

Hatu
Excited to see it launch :)
I believe that’s all the questions

Tim | FalconSwap
Yeah
Thanks for taking all that time

Hatu
I invite anyone who found the concept of price protective insurance and the ability to launch synths easily to check out http://openpredict.io/, and to be a part of the community @openpredict
Thanks for having me Tim, and the Falcon community

Tim | FalconSwap
Everytime I talk to you I learn something new about the Prediction market and where DeFi may evolve

Hatu
Sorry Lorenzo could not make it, but troubling times for health these days. Perhaps there can be a follow-up AMA once he recovers 😁

Tim | FalconSwap
It was a pleasure to have you here and thanks for taking time for our community to answer all the questions.
We wish him a speedy recovery.
I hope you all enjoyed the AMA today

For more information about FalconSwap & OpePredict

• FalconSwap Website : https://falconswap.com/
• FalconSwap Medium : https://medium.com/falconswap
• FalconSwap Telegram : https://t.me/Falcon_Swap
• FalconSwap Twitter : https://twitter.com/Falcon_Swap
• OpenPredict Website : https://openpredict.io/
• OpenPredict Medium : https://medium.com/openpredict
• OpenPredict Telegram : https://t.me/OpenPredictAnnouncements
• OpenPredict Twitter : https://twitter.com/openpredict