 Alright guys, we've got another episode today, we've got a special episode because we've got the co-founders of a new Ethereum decentralized token trading system called SWAP and let me quickly read out their bios. So the first co-founder is Michael Oved which is a co-founder of SWAP and Ethereum token trading ecosystem. Michael is a veteran algo trader spending a quarter of his life at a leading firm Virtue having been on the founding team and grown its Asian operation to a multi-million dollar business. He's a graduate of Carnegie Mellon originally from Los Angeles and a fan of all things music. Now his co-founder is Don Mositz, he's the founder also co-founder of SWAP and Ethereum token trading ecosystem and Don is a serial entrepreneur, product designer and full stack engineer with more than a decade of experiencing building products for companies such as Google and Zanga and as well he is a graduate of Carnegie Mellon and originally from Pittsburgh and a fan of all things photography. Guys, welcome to the show. Thank you. Thanks for having us. So the first question I actually have because I haven't done too much research on this to tell the truth is what is SWAP? Sure, so I think ultimately SWAP itself was a blueprint for a decentralized token trading ecosystem. We've designed it with like the power of blockchain in mind. So in that sense, a focus on peer-to-peer, a focus on decentralized. And with this burgeoning token economy, I mean you have token launches happening like almost every day at this point, there are more and more of these and we deal in trading those tokens. All right, so run me through it. You mentioned for some people that might be a tongue twister, decentralized trading ecosystem. So in a nutshell like explain to us in plain English for somebody let's say who just got into crypto space like what is that? Yeah, so maybe we'll start with like the history of what the inspiration for this design was. So like historically there were marketplaces and marketplaces are mostly peer-to-peer, open bazaars. These are happening in towns historically in like the central square and then this evolved over a long period of time and you had the trading pits in Chicago, New York. And these trading pits were essentially rings of people and also the transactions happened peer-to-peer. In the late 90s early 2000s there was advances in computing power allowed for order books to evolve. And so what's an order book? An order book is basically a list of bids and offers stored electronically. And that's how most of us are used to trading because we have seen this, you know, we see it on all the exchanges we interact with. And now we have this new exciting paradigm called the blockchain and, you know, it's really, I think that there's the demand within the ecosystem for people to be able to trade without middlemen and, you know, the blockchain allows for that philosophically but there are some limitations, you know, with the blockchain. For example, you know, scalability is a concern and the nodes are distributed. So we kind of came up with a design where, you know, we're not limited by the blockchain. So like I just want to summarize, since the word itself has swapped the name of the company, so people are generally going on there and are they selling tokens and buying other tokens or is this something similar to like say shapeshift where I want to transfer between two different types of tokens? So I think that interaction model that you have with shapeshifts where you are actually performing it, like I think they use the term like deposit and receive, you're actually kind of trading like cryptographic assets with them. So that's like a one to one kind of trade and that interaction is actually what happens in our in our design as well. So there's no there's no order book, sorry, no order book there. But at the end of the day, it's about either having tokens you want to trade away or being interested in trading for specific tokens and being able to find those and find people to trade with. So let me kind of paint this in the area, paint the picture over here. I want to trade let's say I don't know 100 Golem tokens for I don't know certain amount of Ethereum and now place that order on there and then other people will fill that order for me. So does it become more kind of like a Ubersk model where like I send the message out in the network and depending on who wants to actually receive my message, they will receive my message like I'm just trying to kind of visualize this. So you would you would you would have your 100 tokens that you're trying to sell for Ether, but you would you would indicate that you wouldn't you wouldn't price it yet. You would indicate that you're interested in selling these tokens and then people who are interested in purchasing them would actually reach out to you directly in a peer-to-peer fashion. Okay, so when they reach out to you, is that an instant transaction or it's kind of like a messaging app or like hey I'm interested in actually buying those tokens and I'm going to offer you X, Y and Z. Actually that that kind of instant messaging model is is conversational in the same way. So like once you connect to somebody who's interested in either buying or selling the tokens that you're interested in selling or buying you would actually request an order from them, they would provide an order to you and then you can work out the price from there. Okay, so once you requested and I work out the price and let's say once we agree on the price, how is the actual process facilitated? Are the tokens in an escrow, am I using my own private address or do I have an address on swap? Like how does that process actually look like? So once that once that order is crafted say that I want to trade token X for token Y and you would like to perform that trade with me, you would create an order, you would be the maker in this case and then you would provide that order to me and I would actually take the order and submit it to a smart contract and it's it's filled on the blockchain at that point. Okay, and so the funds are never held by swap. So you're never held by swap, right? At all. Okay, so swap is just the facilitator of the transactions. Well it's a facilitator of the discovery and then the facilitator of this negotiation which could be a single message pass or multiple and then that is subsequently filled in the blockchain. Now do you guys have your own native token within swap? Well that actually is a part of our token design. So our design is such that holding a token gives you access to our services that we're providing and you could of course trade those because there'll be your C20 compliant as well. Okay, we wanted to choose that design because we didn't want there to be necessarily any fees on the trades itself because then you were designing the system such that it has as little friction as possible. Now are there going to be caps on this? For example certain exchanges will have a cap so you can withdraw or even deposit sometimes. Is there going to be limits of what I'm actually able to sell or buy? Sorry I thought Ovid might take that but so there are no limits really. Ultimately it comes down to the balances that you hold in a token. So like say that I because the contract itself will actually perform transfers on each kind of respective token so if you hold NOSIS and I hold Augur for example we the orders craft is that 100 of token A will be exchanged for 200 token B and then that is filled on the contract itself. Okay that's interesting. Let's go back to something Ovid said earlier on the fact that for the scalability issue that you said even though it's on the blockchain what are you guys crazy you said something interesting you've solved at least for now the scalability issue when it comes to let's say too many users how does that look like? Yeah so I mean most of the interaction happens off-chain and I think that that's that's a design that a lot of projects have chosen but further more you know we think that because we're not using an order book an order book is basically a public location where people can find bids and asks and so when a market maker comes to an order book they're posting an order they're not sure that it's going to execute so cancels become a regular occurrence on an order book. Cancels are something you have to cancel your order or something you have to think about on the order book with peer-to-peer it's actually a client requesting from another client and ordered directly so we think that cancels will be much less likely. So based on that though what is then your business model for SWAP? Yeah so we are planning on you know in the short term launching a token and having this be an open source at least parts of the platform to be open source and the token itself will give users the ability to access the platform. So to summarize the strength of the network the more users you have on SWAP the more people facilitating and using it for their own benefit because you mentioned there's no transaction fee so if I want to sell my let's say 10 golem for whatever someone's buying it for there's no transaction fee to facilitate that transaction so therefore the if I understand this the business model is then based on the network effects network structure and how many users are using it on a daily basis. Well yeah the token to be to be a license primarily. Okay so you want a token you have access. Okay going back and I'm flipping around but going back to the UX because that's a big big pain or pain point in the industry because most UX designs are just horrendous will an individual be able to do this on their phone in real time like flawless beautiful click a little bit you know two three buttons and they're operational. Well so I think I think first and foremost the way that we approach the development of our product is by trying to create like applications that the crypto crypto community is going to be using on a daily basis and so that I mean that like just designing for that actually very clearly informs how we should design this protocol and it's been very helpful I think so far so what that does look like for sort of an everyday everyday user is an application much like some of the ones that we've actually demoed during our previous updates on the protocol so we do want to create a nice smooth way to actually to discover counter parties and and perform these trades and and even that we expect to implement in like a fully decentralized manner so even the infrastructure that we develop is going to be in the same in the same ethos I think. So for now it's just going to be a desktop app I assume. Well so right now we have I mean we have a native iOS app that we've we've developed I think that was the first kind of demo that we put up we also have a web based application that I think we demonstrated it on mobile through the status app but the web application would also work in any web environment that provides web three which is which is a module that's provided by things like mist and metamask and status so that web app would run in those cases as well so yeah I mean the web will be will be cross device but the I think the native app is going to be pretty nice too what would you say was your biggest hurdles in the creation of this from a from a design or an implementation standpoint say both I think Oved can speak to the design because I know that he did a lot of research over the course of the the last many months of last year and then looking into order books and how to best implement this stuff so I think maybe coming to coming to the current design was there was a lot of thinking involved Oved can you speak more to that yeah you know I guess I guess an experience with you know market microstructure on hundreds of exchanges you kind of get you get an idea for what designs will work and what designs won't work and you know the the technology that is available in the in the classic finance world is very sophisticated and you know they have their order books know the state of their system in under 40 microseconds so that's 40 millionths of a second so you know and that's and that's a physically centralized system and that's why it's able to get so fast if they're using hardware they're they're optimizing all their software so you know we were kind of we were kind of trying to when you look at this space I think everyone looks at it and says we want to decentralize exchange we want to write you know an exchange in a smart contract and then you know they they there have been a lot of implementations of that and I think that you know a lot of them have you know they haven't been designed with with with the limitations that that you have when you're writing it into a smart contract and so we kind of we kind of were trying to think outside of the box and not think as far as what how to take an order book and put it on the blockchain and we came up with here to here nice um another question I have is in regards to private information for example a shapeshift all I got to give them is my two addresses the one that I'm buying for and the one I'm receiving for how would it look like for using swap when it comes to private information I think it'll look pretty similar to that I think the goal is to you know we don't necessarily need people to to to register their full identities to be able to trade our system at this point so I think out of the out of the box that it's it's definitely a similar kind of goal so this brings up an interesting question where do you then see the future of for example decentralized token and crypto exchanges decentralized yeah they're gonna become decentralized okay yeah I mean I think sorry go ahead no you go ahead I was gonna say I think that there's gonna be a lot of um cool implementations over the next two years we're gonna see a lot of different different approaches and I mean ultimately for token uh swapping in turn and out of tokens I think that that's gonna be for the most part on decentralized solutions cool and I think there's there's a place for for multiple designs at this point um the use cases change the interaction models change based on on those and so when uh when are you guys launching so um I think that we've I mean we've basically talked about our token um and we're we're starting to work on that um at this point we want to make sure we have the the protocol right we want to get we want to get people looped into our our beta program and using our software and get that right um so we're still in a phase where I think we're we're building and we want to make sure that everything is is looking pretty solid um I think you know through through the rest of this year and through the end of the year um you'll be hearing more and more from us on that so so then like you can tell us maybe like rough rough next year you should potentially see a launch um I think we're talking about this year for sure okay cool very cool are you guys looking for new uh any more beta users um we're actually in pretty good shape we had an excellent response um we we put up a post um not too long ago actually asking people to to join up um so I think we might have a little space on there if anybody wants to jump on um at our website at swap.tech that would be awesome love to have you cool awesome little guys want to thank you so much for coming on the show if they want to get a hold of you or find out more information about swap what is the best resource uh yeah I think the website's probably a good start um we're on medium and twitter and facebook everywhere you can find us at uh swap protocol cool awesome thank you guys all right thank you very much cheers cheers