GRTiQ Podcast: 87 Nico Vergauwen

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Nico Vergauwen (00:13):

And I remember working in my consulting job and each day refreshing The Graph homepage to see when it would go live because I was tired of always creating these indexing services from scratch and in the browser.

Nick (00:35):

Welcome to the GRTiQ Podcast. Today I’m speaking with Nico Vergauwen, founder at Tenderize, a liquid staking solution for web3 middleware. Prior to launching Tenderize, Nico worked as a protocol engineer at Livepeer, launched Livepool, a precursor to Tenderize, and worked as a consultant.

(01:23):

Tenderize has garnered a lot of attention recently within The Graph ecosystem and throughout web3. And as you’ll hear, Tenderize specializes in offering a unique solution for those who want liquidity when it comes to staking their tokens in middleware projects.

(01:38):

During our discussion, Nico talks about his background and entry into web3, his time at Livepeer and where the idea of Tenderize was born, and then we talk extensively about how Tenderize works and how Delegators of The Graph could use it. As always, I started the conversation by asking Nico about his educational background.

Nico Vergauwen (01:58):

Yeah, I guess I have a bit of a irregular background. I was always interested in computers as a kid and also in high school studied science and math. But after that, actually went on to do criminology for two years, but then kind of wanted to go back to computer science, so I did that. Didn’t end up graduating due to… Yeah, I don’t know. Reasons. And then I actually started working in HR, but still the love for computer science remained. And I was digging into blockchain more and more, read a Bitcoin white paper. You know how this stuff goes, you dive into one white paper, then the Ethereum one. It kind of grew from there.

(02:49):

And then I actually got accepted into a post-grad at a university in Belgium that was specifically for blockchain, and this was pretty early on in like 2016 or 2017. And after one semester they asked me to become the assistant teacher, so I was like, “Let me just go find a job in the web3 space then,” and I worked for a consulting company for a year doing proof of concepts for the government and enterprises. But it was a good opportunity for me because I kind of had a carte blanche to play around with technologies that I wanted to play around with. So that was a good learning opportunity for me, actually.

(03:28):

And from there I moved on to Livepeer, which was probably a hard move to make at a time because we were in the full bear market I think in early 2019 and not many companies in the public space were hiring. But I did an EthCC Paris hackathon a couple weeks before I joined and I just kind of made a decision for myself, I’m going to quit my job and find a job in the public web3 space. So I did that, joined Livepeer, spent there three years working on smart contracts and the protocol. And then, yeah, founded Tenderize.

Nick (04:06):

So one of the themes that emerge on this podcast time and time again is the diverse background of people going to work in web3. And you are a GRTiQ Podcast first. I’ve never had a guest that studied for a time in criminology. What was the original vision there? What did you want to do with that education had you completed it?

Nico Vergauwen (04:23):

Yeah, I don’t really know at this point because there actually aren’t really that many job opportunities in that space. You either go work in a prison and do psychological support for inmates or you go work for the police, or you don’t end up doing anything with your degree at all, and that’s actually also why I end up not continuing it.

(04:47):

But I was always interested in what drives people to make certain decisions. And also for example, growing up, families of friends, some of them would go into crime and some of them would go onto university and then become a doctor or whatever. And that sounds a little exaggerated, but that always interested me why that happened. So that’s kind of why I went to study it out of pure interest.

Nick (05:14):

In your background overview there, it seems like you circled around computers but never really committed for a certain span of your life. I’m curious, what was the blocker there? What was it at that time that kind of kept pushing you in other directions until you finally conceded and went all in on it? Do you remember?

Nico Vergauwen (05:34):

Yeah, it was more so I was young at the time. You’re 18, you graduate high school, you’re not always sure what you want to do. And I was like, I kind of don’t want to sit in front of a computer all day because I also liked playing video games, played online poker a little bit when I was in college. That was the decision to not do it, but after a while I just made a decision like, “Hey, with this blockchain thing, this gets pretty interesting and I want to dive fully into this,” because I didn’t understand some of the stuff at first.

(06:08):

I had a bit of a background in computer science of course, but not everything was always clear to me from the get-go and I just started falling in love. I actually always say, I think if I wouldn’t have come across blockchain or web3 or crypto or however you want to call it, I probably wouldn’t be a software engineer because just developing web applications with the data database and then a front end wasn’t for me. But I also wasn’t aware that there was just much more than that in the computer science world as well.

Nick (06:40):

How would you explain the light bulb moment of blockchain and reading some of those white papers to pull you into the space? What was it about it that said, “Ah, this is what I want to do with my life”?

Nico Vergauwen (06:52):

Good question. Yeah, I think the most influential thing there was actually something unrelated to blockchain or crypto. I was reading a couple of economical books and then one of those was Adults in the Room from Yanis Varoufakis. I’m sure I’m pronouncing his name incorrectly, but he was like the ex CFO of Valve, the gaming company, and then ex finance minister of Greece during the 2008 crisis for a couple of months.

(07:26):

And he wrote a book on his meetings within the Euro group with other finance ministers and the ECB and whatnot and basically give a little bit of insight to the political machine behind the currency. And from there I kind of felt like we would need something with more transparency and reading the Bitcoin white paper right after that I think was this aha moment that put it two together. And yeah, the rest is history.

Nick (08:00):

Nico, you’re living in Belgium, that’s where you’re from. I always like to take a moment and ask guests that join the podcast about the attitudes and opinions of the people where they live, what those are towards crypto and web3. So what can you share with listeners about what’s going on in Belgium?

Nico Vergauwen (08:16):

Yeah, there’s very little going on in Belgium, I’d say. The companies that are active in web3, I think I can count them on one hand and it’s probably two or three if you count Tenderize as one. The other one is a wallet for NFTs. So there’s not a lot of stuff going on. I even remember, I think it was in 2018 or 2019, sending an email to the Belgium Financial Authority and asking like, “Hey, what’s up?” Because nobody knows in terms of accounting or anything what to do.

(08:54):

I emailed a couple of lawyers and accountants and even one lawyer emailed me back “Yeah, do you know? Because I don’t know what the regulatory status is.” So I ended up sending an email and they were like, “Yeah, for us it kind of doesn’t exist,” and that was it. And even up to this date, there isn’t really any conversation going on about regulation or anything like that. Of course, as with any new technology, there has been conversation and there are news articles in the news about the Bitcoin price or now recently the price going down, but it’s never substantial about what web3 can do and what it can provide. It’s never that conversation.

Nick (09:42):

Do you have a sense for how greater adoption in Belgium might impact the people there? I’ve spoken for example with guests from Africa and there’s a clear use case there. There’s also some clear use cases in other parts of the world like Latin America. What about in Belgium?

Nico Vergauwen (10:00):

Yeah, I think in Belgium it would mainly be for transparency and governance. We have probably one of the most inefficient governments in the world. I don’t know if it’s still the case, but we used to hold or still hold a world record for longest time without an actual government. I think it’s one year and a half it took to actually come to an agreement to form a government between the parties because we have two different language areas in the country, Dutch speaking and French, and it’s always really hard to come to an agreement between those two.

(10:37):

And then it’s always a conversation about where spending goes and things like that because we have, I think it was seven parliaments or something like that for a million people. A country the size of, I don’t know, the state of Pennsylvania or New York, I guess. Yeah, it’s kind of inefficient. So for I guess more transparency in governance and public spending would be where I think a country like Belgium or other Western European countries could get the most out of web3 technology at a mass adoption scale. But that would be something very far in the future or a very topical vision to have that happen.

Nick (11:19):

When you were talking about your background, you mentioned that your pathway into web3 was first at a consulting firm and then you found your way to Livepeer. You’re the third guest I’ve had from the Livepeer community. I’ve been fortunate to have Adam Soffer and Yondon Fu on the podcast before. You got started in that consulting role in 2017-ish. How has the space changed or evolved since 2017?

Nico Vergauwen (11:45):

Oh, it’s evolved immensely. Back then you still had a heavy conversation going about enterprise or private blockchains versus public blockchains. That’s not really the case anymore. You see teams like IBM’s Hyperledger really cutting down in personnel and resources that they are spending. There is still a little bit of that going on, but I think most people have recognized that public is the way forward. And then from there, the space has just grown so much in the last couple of years.

(12:19):

I remember coming into the space in 2017, 2018, and it was easy to keep up with most noteworthy projects in the space. But today there there’s just so much to keep track of. And I imagine even from newcomers coming into the space today, there is just so much, and I wouldn’t even know where to get started at this point. And early on it was also very hard to find tooling or even do integrations with other protocols, but nowadays everyone is bowling on top of each other basically. And then you got protocols on stacked on protocols, and whether that’s always a good thing I’ll leave in the middle, but you see it as there’s really a lot more interoperability, composability, a lot more developer tooling, and just a lot more people active in the space and spreading the mission.

Nick (13:16):

Given this perspective and the time you’ve had in the space, what are some of the next big things you’re anxious to see happen? Is it some sort of settlement or agreement on regulatory matters? Is it more devs working and building gaps in the space? What are those milestones in your mind?

Nico Vergauwen (13:35):

In my mind, coming from a web3 infrastructure background at Livepeer and still wanting to build on top of that now with Tenderize, it’s mostly recognition from… And this might sound weird to people, but recognition from the web2 space in the sense that you have big products in the web2 space that a lot of apps and users are actually using under the hood. If we take Livepeer for example, it’s a decentralized network for video encoding and decoding, but it also has web2 competitors like, let’s say Mucks, and they use cloud infrastructure.

(14:16):

But I’ve always considered it like the ultimate goal if they would just have to cave in to the cost benefits of web3 and move to the Livepeer network instead of cloud infrastructure as their infrastructure or at least a part of it because the disruption in cost benefits is just too much. That’s what I mean with recognition by web2 I guess.

Nick (14:41):

When you think about web3 infrastructure, you can’t do that without thinking about the web3 stack. How far along are we in having a fully developed, functional web3 stack?

Nico Vergauwen (14:53):

I think if you want to build a decentralized application today, that’s definitely possible. It will use a lot of these infrastructure networks under the hood. But what I think is still a little bit of an issue is that everything is connected through centralized gateways. A lot of people are using Infura. If you store something on something like Filecoin, you would use a gateway for that as well. And the alternatives to that would either be that everyone self-hosts or people start paying for these requests themselves.

(15:26):

Both are a little bit of a hard ask if you want to reach mass adoption. So yeah, I guess it’s possible to already build quite decentralized applications at protocol level, not so much at maybe the application level per se, but if you have many open source application building on top of a protocol, that might be okay. Because I also think web2.5 applications, so to speak, applications that incorporate web3 protocols but aren’t necessarily fully decentralized front-end applications are probably the best way to draw more users into web3.

(16:08):

I think a good example of that we had with Livepeer early on was PlayDJ.TV. They boomed during COVID and they’re a platform for DJs to live stream their sets, but they had to shut down due to their infrastructure bills on AWS with all the streaming going on. And then they switched to Livepeer and they were able to get back online because the cost was just so much lower for them. But to date, it’s still just a regular web2 application you would go to, but it uses Livepeer under the hood. And I guess slowly advancing that to adopt more and more decentralized infrastructure is probably the way to go. I don’t think we can expect this sudden revolution of everyone switching to decentralized applications or web3.

Nick (16:58):

Is that gateway issue you mentioned there, and forgive me, I’m not super technical, is that something more associated with growing pains and just greater adoption that eventually goes away? Or is this an infrastructural component that needs to be addressed from more of a architectural solution?

Nico Vergauwen (17:18):

No, I think it’s definitely more growing pains. You will always have a user base that would want to use a hosted service for them that they wouldn’t have to run themselves and there would be other users that would happily run everything themselves or share it with a couple of people they know personally. But I think the current issue is just that there aren’t enough options available.

(17:44):

Like I said, most people would use Infura, you have Alchemy, you have a couple of other RPC providers popping up these days, but it’s still only five or six. But once you have good competition there, there’s still a crowd that would want those kinds of products. So I don’t think it’s a real issue. I think once we get more adoption you will see more services popping up, but also more people running their own infrastructure. And even turning that into services in their own term probably, if they can make it a profitable business. So yeah, once we grow, I think just growing and having more people participate and grow their operations and services is also off through decentralization.

Nick (19:47):

So Nico, after you did your consulting work, you mentioned that you ended up at Livepeer for a period of time. What can you share about your time at Livepeer and what you did there?

Nico Vergauwen (19:56):

Yeah, I worked mainly on smart contracts and the node software that interacted with that, and Livepeer is a decentralized network for, in general, I would say live-streaming infrastructure. And currently it’s encoding and decoding video, which means, for example, if you watch a live stream on something like Twitch or YouTube, you can select the video quality like 1080p or 720p. But they are actually all different videos that are in a playlist and if you switch quality, a different stream actually starts playing.

(20:33):

So you have to take the input stream from a user and convert it into all the different formats you want available. And that’s quite compute heavy. If you want to do that all on cloud infrastructure, you’ll run up quite a high bill. So Livepeer kind of made a decentralized marketplace to do that whereby users would bring on their GPU power or even CPU if you want, encode and decode videos for people that want that service.

Nick (21:04):

While you were at Livepeer, you started a side hustle or something you’ve kind of called a hobby in which you started working on Livepool, which I think takes us to ultimately why we’re talking today, which is Tenderize. What can you share about the work you were doing at Livepool and what was the moment you realized that you wanted to work on something like this?

Nico Vergauwen (21:25):

Yeah, Livepool, to give a quick introduction on it, is basically similar to a Bitcoin mining pool whereby you would connect your computer to it, mine Bitcoin, basically solve some hashes and you would get Bitcoin in return. But in this case you would connect your computer with your GPU to my Livepool notes that I would run and you would get paid in ETH for encoding and decoding these live streams and you wouldn’t have to run a full Livepool, no know anything about a Livepool network, just basically know how to deal with receiving ETH payments.

(21:59):

And that was actually initially just a hobby project to learn more about my job at Livepeer and the software I was working on. But it was also, since the launch of the network, a highly requested feature that something like that would exist. So at EthCC London in 2019 I decided to hack it together and it kind of took on its own life from there. We started with a couple of users and then at its peak, I think we had 120 people connected to it with their GPUs. That was more than the amount of actual nodes on the Livepeer network itself.

(22:41):

And from there it actually turned out to be a very good onboarding tool to onboard people as full nodes onto the Livepeer network and kind of feed the demand side. It was still a hobby project and I felt like it was getting a little bit out of hand, so I was pushing people to also run full notes on the Livepeer network. And even today I still try to keep it up to date a little bit, but I have a lot of other things going on with Tenderize at the moment, so it’s not always easy to continue development and add features.

(23:11):

But yeah, I fully open sourced it and I hope other people in the community take it a little bit further than what it is at the moment as well. But yeah, I just love the fact that a lot of the current node operators on the Livepeer network actually took their first steps using Livepool and I think that’s probably the best thing that came out of that.

Nick (23:31):

Nico, you may not know the answer to this, it may have extended beyond what you were working on while you were developing Livepool, but I’m interested in this graduation of people from working in Livepool to going to node operator because as you said, someone in Livepool doesn’t necessarily need to be highly technical. So at some point they had to graduate or level up, so to speak, to become a node operator. What was the process behind doing that?

Nico Vergauwen (23:56):

Yeah, initially it was spending a lot of time in DMs with people just one-on-one and putting in the effort, and that in turn educated those people and they in turn started educating other people. And even today in the Livepool Telegram, I’m not very active there, but other people are still teaching people how to run the software. And also, you see that currently in the Livepeer Discord as well. Those people are currently just educating other people. I guess once you get the ball rolling with a couple of people, it just expands from there.

(24:34):

And another important part for people that actually had the technical knowledge, which were actually quite a bit of people and I’d say the biggest proportion of people that came to Livepool, but for them it was more like, “I want to see that this actually works and that I can connect my computer and actually get something in return.” And doing that in a easy way and just a setup of a couple of clicks and being able to test that yourself, I think that was removing a big barrier for people into diving into the Livepool network in full because that requires a little bit more investment upfront.

(25:11):

Course you need to have stake, you need to read the documentation, run the full note, have enough compute capacity available, bandwith available to do that. So yeah, there’s a little bit more upfront investment and also a little bit of more work involved for yourself after that. But yeah, once people got to dip their feet in, I think they just wanted to learn more as well. And that’s how we got rolled.

Nick (25:36):

After the success of Livepool, which you mentioned you started really hacking on in 2019, we arrive in April, 2021, which is when you formally launched Tenderize. And for listeners that may have seen Tenderize on Twitter, there’s been a lot of talk within The Graph community, a lot of interest in Tenderize and what it can do. For those that may have missed some of that, how would you explain what Tenderize is and how it works?

Nico Vergauwen (26:01):

Yeah, Tenderize is a liquid staking protocol and we focus on web3 infrastructure protocols like The Graph or Livepeer. You wouldn’t see Ethereum in our application at the moment. We focus on those work protocols. And with liquid staking you would deposit your GRT, for example, in Tenderize, you would get a token in return that equals that amount and your funds would get delegated in The Graph Network. And you would participate in The Graph Network that way and you would have a token that represents your stake and you can sell that instead of having to, for example, wait 28 days in the case of The Graph to get your funds back or you can, in the future, do other cool things with that in the ecosystem.

Nick (26:51):

Target protocols, as you said, are work protocols. Hearkening back to some things we talked about earlier about how the space has evolved since 2017, there’s a lot of projects. It’s hard to know, as someone who wants to get involved in web3, where to start, where to begin. Have you done any market analysis to determine what proportion of the whole space are these work protocols that you’re targeting?

Nico Vergauwen (27:14):

I think it’s actually a very small portion of the space. I think a lot of it is DeFi protocols, especially during the boom of that in 2021 and then we had NFT projects. But I think the real web3 infrastructure protocols, you don’t see a lot of them because they are not easy to build. There’s really complex problems involved with building them, and I think one that we’ve probably discussed the most with other teams during my time at Livepeer was how do you actually verify that some computational work is done correctly if it’s not something like producing a blow, and how do you provide good network incentives for that?

(27:58):

And you also see that in how long it takes to bring one of these protocols to market. Usually I think for Livepeer it started development and the idea probably in 2016, development in 2017 and it then launched like a year after that. But it’s been on a long journey since then, whereas some DeFi protocols, they can quickly launch in a couple of weeks or months because they contain a lot less moving parts. For a web3 infrastructure protocol, you need probably smart contracts for staking and maybe distributing fees or rewards, maybe verification as well. But you also need this big piece of software underneath it that allows computers to talk to each other and distribute work on the network to allow people to come in to actually have something done for them on the network that they want. So there’s a lot more moving components and a lot more development involved with those.

Nick (28:55):

Going back then to how Tenderize works, I want to explain this for listeners who aren’t really familiar with what liquid staking is and the mechanisms by which this works. So I’m going to reframe it back to you Nico, and then invite you to edit, change or suggest corrections after I’ve done this.

(29:15):

But in essence, someone who wants to be a Delegator at The Graph, one pathway to do that is acquire GRT and then delegate directly yourself through your wallet to an Indexer in the Indexer pool that you’re comfortable with that you’ve done some research with. However, if you ever want to get access to your GRT, there is a thawing period. 28 days at The Graph, which, again, you can correct me if I’m wrong, but it’s pretty common for these work protocols to have a thaw period if they don’t mess this up, the incentives of everybody participating.

(29:49):

Tenderize comes along and you, what, can acquire your GRT, connect your wallet with Tenderize, and in essence they give you a token back. They go and delegate that GRT on your behalf, but you don’t have that 28-day thaw period anymore. You can basically just turn around, give that token back to Tenderize and get access to your GRT. Have I done a good job here in my own layman terms of describing this?

Nico Vergauwen (30:17):

Yeah, that that’s exactly correct how you describe it, and you indeed get this token in return and you can redeem it instantly through a liquidity pool and there would be like slippage involved with that and trading fees. But there’s also still the option if you stay through Tenderize to go through that thawing period for 28 days in case of The Graph and wait and then withdraw your tokens. And that’s really, really important, but I think the most important thing is once you kind of tokenize the assets, you can unlock these new use cases and utility for these assets and then stake. And that could allow people to get a lot more capital efficiency, for example.

(31:00):

And what we’ve done now is one step, we take your stake and we delegate it towards a node selected or an index or selected by the protocol. But our true vision for what we want to build and what we’re also working on is taking that experience like you would have in The Graph at the moment, you would go to an Indexer you like, select how much you want to stake to it, and you would do that through Tenderize and it would allocate your GRT to that Indexer specifically without Tenderize choosing where that steak should go. But you get that token in return. So essentially you get the native staking experience of The Graph and you would get the benefits of liquid staking in return, and that’s the vision we want to unlock and what we’re currently building for the next version.

(31:50):

Because like I said, the ultimate Holy Grail for us for liquid staking is not some easy way to gain access to yields. For us, it’s unlocking those new use cases. And for me as a node operator on the Livepeer network for example, coming back to Livepool, one dream that I’ve always had was being able to collateralize my stake towards my node and use that to bring my service, hire someone for DevOps, spin up more servers, gain access to more cash flows because now my staking rewards would also be liquid so I could use that as well without having to go through any thawing period.

(32:33):

So I think it could open up a lot of doors for node operators in these infrastructure protocols and not only just serve as a nice way to get yield. I think that’s still very useful to have that for people that just want to contribute to the network but aren’t really concerned with selecting an Indexer, but I think we should still have that layer underneath that still allow people to choose where their state goes and stay as true to the native staking experience as possible, but adding a lot of benefits and utility on top of that.

Nick (33:09):

I want to ask a couple clarifying questions and forgive me if it’s redundant to something you just shared there, but just to get super specific. The first question is, as it presently exists, if I as a Delegator use Tenderize as opposed to other ways to participate as a Delegator, do I get to select the Indexer presently or is that something that you are currently doing?

Nico Vergauwen (33:32):

No, we currently have one Indexer selected that we selected at Genesis and we did an analysis on profitability or reliability of a couple of Indexers on the network and we regularly monitor those statistics as well. And from there we had to make a decision, are we going to upgrade this to allow more Indexers to be delegated to but still be opinionated on where stake is allocated, and then it would become a pool of Indexers but you would still end up with a lot of the same issues that have been talked about in, for example, the Lido community whereby Lido does liquid staking for ETH and they, I think, have 30 or 40 validators in their pool. But a lot of ETH ends up being staked to Lido to those validators and you end up with centralization of stake and potential cartelization of those validators.

(34:34):

So we made the decision, okay, let’s not create this tool that already exists, for example, for stake ETH, but let’s do a radical new thing and try to create this native staking experience for Lifepeer or The Graph, but with liquid staking on top. And we think that that also allows validators and node operators themselves to be onboarded to liquid staking protocols and unlock the utility themselves. Because right now, the benefit for using something as Lido for a validator on ETH, for example, is just attracting more steak that you yourself don’t have.

(35:13):

But you wouldn’t, in the case of something like the [inaudible 00:35:17] or something like that, you wouldn’t put in your own stake into a pool as an Indexer because your steak is your resource to indicate how much work you can get on the Brass network because work allocation is stake-weighted. So you don’t want to share that with other Indexers, really. Maybe a little bit of collaboration is good, but a little bit of competition is also pretty healthy for a network. So ultimately you would want something of yourself as an Indexer, and that’s what we are creating as looking for the most important stakeholders of these networks.

Nick (35:52):

Is the Indexer that you’re working with public information?

Nico Vergauwen (35:56):

Yeah, everything is open source. You can just query that from the smart contract even directly. I don’t think it has a name in The Graph Explorer, it’s just an address. So I wouldn’t over the top of my head be able to recite that, but yeah, that’s all public information. We have dashboards publicly on Dune and DefiLlama as well. It’s all open source so anyone can check and verify.

Nick (36:49):

And did you say that if I were to use Tenderize and I staked and I started earning rewards that I could actually liquidate just the rewards portion that I’m holding there and keep my initial stake with that Indexer, I can basically harvest the rewards?

Nico Vergauwen (37:08):

Yeah, that happens automatically for you. Your rewards would accrue in your balance. You would get a TGRT token if you go through Tenderize and as you earn staking rewards, your balance would automatically increase.

(37:21):

So let’s say you deposit 1,000 GRT and after two weeks it would be 1,050, for example. You can just choose to sell that 50 GRT that you earn and still keep that 10,000 TGRT in your wallet, which would then be still delegated to that Indexer on The Graph Network.

Nick (37:40):

Nico, let’s talk a little bit about then the economics behind all of this. So in the instance I provided before, as a Delegator, if I want, I can go direct to an Indexer. I can do some analysis on the anticipated return on my GRT if I stick with them, and there’s a lot of community calculators and different tools that someone can use to determine that. How about through Tenderize? Am I paying Tenderize? Am I giving up some of that yield to be able to use this solution and have liquidity?

Nico Vergauwen (38:09):

Yeah, there is a fee associated with using Tenderize. 5% of the staking rewards would go to the protocol treasury and that can be used to, for example, add liquidity. And 5% would currently be used to incentivize liquidity providers to add liquidity to the Tenderized liquidity because we don’t have our own token, for example, so we can’t do things like liquidity mining and give our own token away to attract liquidity providers.

(38:39):

So those are the fees currently associated with the protocol, but we expect as we create more utilities for our Tender Tokens, as we call our tokenized staked assets, that cost is offset by the utility we can actually create.

Nick (38:55):

Okay. So Nico, as I was thinking about Tenderize and doing research for this interview, the question I most wanted to ask was this. That 28-day thaw period doesn’t go away in this scenario. Somebody still has locked up GRT. In the case of Tenderize it’s you folks, and I get the TGRT as a Delegator in which I can preserve my liquidity. So my question is, how do you guys then work around that thaw period? What if all of a sudden, everybody that’s using Tenderize says, “I want to get access to my GRT and liquidate,” you’re still stuck with that 28-day period. How do you navigate that?

Nico Vergauwen (39:34):

Yeah, good question. So I think it’s important to know that if someone wants to liquidate their TGRT and they go through the liquidity pool, those funds are not removed from the delegation. You are simply trading against a liquidity pool. So those funds would still remain in The Graph Network and are subject to slashing or whatever could occur during the thawing period, for example. We only unstake when a user comes to Tenderize and specifically says, “I want to wait for the 28-day thawing period.” Only then are funds removed from the Indexer we delegate to.

(40:16):

Of course if everyone at the same time wants to go to the liquidity pool, then you would get probably similar to a bank run. The peg would break and that would obviously be a bad thing. But luckily there is still the option available to go through that thawing period in case there isn’t sufficient liquidity. And that actually also creates an interesting arbitrage opportunity whereby let’s say TGRT isn’t trading one-to-one with GRT for some reason, like you would’ve recently seen with steak ETH and ETH. I think it was like 0.93 steak ETH per ETH at one point. Then you could come in and you could unstake some of the TGRT that you have as a liquidity provider in that pool, wait 28 days and then add it back as regular GRT to do arbitrage.

(41:08):

So arbitrage becomes this time risk-based thing whereby you can balance the pool if you are willing to take the risk for 28 days for a thawing period. So it’s just a time value of money thing, and that creates an interesting mechanic for market makers I think, which is probably still a little bit unexplored because there’s probably only liquid staking for, for example, ETH at the moment, which doesn’t have unstaking available. So you see this negative slide in the market because no one is able to restore that balance by being able to unstake their funds and weight.

Nick (41:49):

Does Tenderize use The Graph for any of its own infrastructure? I mean, it’s very clear here that it’s a work protocol that Tenderize has identified as providing liquidity for, but what about on your infrastructure? Is The Graph something you use?

Nico Vergauwen (42:04):

Yeah, definitely. I wouldn’t be able to live without The Graph and subgraphs, honestly. We use subgraphs for our protocol to index a lot of data that’s actually shown in the app and it’s actually very data-rich. We don’t show a lot of information that’s actually available in the application, but you could build a very large dashboard off of the data that’s in our subgraphs, actually.

(42:30):

Because I remember the days that you didn’t have a service like The Graph and if you wanted to do index events, which is what The Graph Network does, it indexes events on the blockchain, you would have to do that on the use users machine itself or on some centralized server and you would have to write everything for that from scratch. And I remember working in my consulting job and each day refreshing The Graph homepage to see when it would go live because I was tired of always creating these indexing services from scratch and in the browser. So yeah, I’ve been a big fan of The Graph and we’ve been using it at Livepeer as one of the early launch partners as well. And then at the Tenderize as well, we use it heavily. So yeah, big user of The Graph.

Nick (43:21):

Going back to our earlier discussion about infrastructure, and I know that’s a lot of the lens that you use when you evaluate web3 and what’s going on. When you think about the web3 stack and the infrastructure required to carry that out, is something like The Graph a necessary element of that stack?

Nico Vergauwen (43:38):

Yeah, I definitely think so. Like I said previously, developers had to build that from scratch and it wasn’t really a good solution either. So something like The Graph I’ve always seen ever since its launch, it just like a cornerstone of being able to build data-rich applications on top of web3 protocols.

Nick (43:57):

When you look ahead at what is possible for something like Tenderize and maybe the roadmap, so to speak, of what the future looks like, what’s your vision?

Nico Vergauwen (44:07):

Like we already talked about, we want to unlock this new utility and these use cases for participants in web3 infrastructure protocols. So we’ve launched the pools, the liquid staking pool, so to call them, similar to Lido for GRT, LBT, Audius, and Polygon. We’re definitely looking to add more assets in the future, but we’re currently working on bringing that vision to life of having each Indexer on The Graph Network being able to have its own tokenized asset, and use that in DeFi, collateralize its stake, use its stake to hire people, acquire more hardware or just be able to get access to more capital efficiency.

(44:49):

And that’s what we’re currently working on building. We’re hoping to release it by the end of the year or Q1. We’ll have a white paper on that coming out in a couple of weeks as well. And after that for us towards building utility for these tokenized assets and people being able to collateralize their stake GRT for example, or having something like auto repayable loans or other cool DeFi integrations that people would like to see.

Nick (45:18):

Nico, if people want to learn more about Tenderize, how to use it, how to get started, what’s the best way for them to do it?

Nico Vergauwen (45:25):

Yeah, there’s our homepage where you can find a lot of information. You can find a link to the documentation portal, which has guides. They’re also in our blog. You can join the Discord where we’re always there to answer questions or to help anyone that’s stuck. We always welcome more community members, so hop into the Discord, check out the guides we have, and I think that’s the best way to get started.

Nick (45:51):

Well, I’ll place all the links that you mentioned there in the show notes, so I want to encourage any listeners that are interested in learning more about Tenderize and exploring if it’s something they want to use to visit the show notes and there’ll be plenty of links and resources there.

(46:04):

Well, Nico, now we’ve reached the point in the podcast where I’m going to ask you the GRTiQ 10. These are 10 questions I ask each guest of the podcast every week in hopes of letting listeners learn something new, try something different, or achieve more. So are you ready for the GRTiQ 10?

Nico Vergauwen (46:20):

Yeah, I’m ready. Let’s bring them.

Nick (46:32):

What book or articles had the greatest impact on your life?

Nico Vergauwen (46:35):

I think I’ve mentioned it on the podcast. I think Adults in the Room by Yanis Varoufakis. I think that one definitely had the most impact because that what’s made me go into web3 and going into web3 has been the most impactful thing in my life. So I think without that book, I might have not taken that leap. So that’s been the biggest one for me.

Nick (46:56):

Is there a movie or a TV show that you would recommend everybody should watch?

Nico Vergauwen (47:01):

As a kid growing up in the ’90s and early ’00s, I’m a big Lord of the Rings fan. I remember watching them in the theaters as a kid and also read the books that are even better than the movies. So that’s probably the franchise I fell in love with the most. That was good.

Nick (47:20):

If you could only listen to one music album for the rest of your life, which one would you choose?

Nico Vergauwen (47:25):

Oh, I honestly wouldn’t know. I haven’t really been into specific albums or artists. I have a lot of different things on my playlist and even when a song comes on the radio, I’d know the song and I’d maybe even sing along to it, but I wouldn’t know the title or the artist even at times. So I’m not really good at remembering album names or music title names or anything like that.

Nick (47:54):

How about this, what’s the best advice someone’s ever given to you?

Nico Vergauwen (47:57):

Huh, that’s a tough one. I have to think really, really hard on that one. I think it’s a little bit cliché, but just do what you love, find the passion you want to do, and focus on that and the rest will come by itself.

Nick (48:16):

What’s one thing you’ve learned in your life that you don’t think most other people have learned or know quite yet?

Nico Vergauwen (48:23):

Oh, I wouldn’t want to consider myself as someone that has knowledge that other people don’t have. I always say to myself, “Don’t try to be the smartest person in the room,” so I always try to learn more from my peers. So I don’t really think there’s much that I know or specific insights that I have that other people don’t. I think there’s always people that share those insights. It’s just a matter of finding those people and discussing ideas.

Nick (48:53):

What’s the best life hack you’ve discovered for yourself?

Nico Vergauwen (48:57):

Best life hack? God, I don’t know. There’s so many. They’ve just become such a habit that I… Yeah, because you see these things sometimes pop up on social media and you try them out and a lot of them don’t work and some work and then they just stick. I can’t really tell specific ones because they’ve just become a habitual thing in my daily life I guess.

Nick (49:21):

Based on your own life experiences and observations, what do you think is the one habit or characteristic that best explains how people find success in life?

Nico Vergauwen (49:33):

According to my own experience, I would say have a hacker mentality. And by that I mean be willing to dive into complex problems and not shy away from them and try to solve them on your own because that will allow you to learn a lot more rather than going to someone and asking someone and getting their perspective on things. It allows you to create your own perspective and you can still ask for advice after that, but being able to sit down and work on a problem, I think for me, that’s been the biggest one or the biggest contributor.

Nick (50:14):

And then finally, Nico, the final three questions are complete the sentence type questions. So the first one is, the thing that most excites me about web3 is?

Nico Vergauwen (50:24):

web3 infrastructure protocols. It sounds boring, but like I said, it would be exciting for me to see some big names in the web2 space move over to web3 because yeah, the disruption is just too big.

Nick (50:39):

The second question, complete this sentence. If you’re on Twitter, then you should be following?

Nico Vergauwen (50:44):

Good question. Who should I mention here? Yeah, there’s so many people. I wouldn’t know exactly who to mention, but if I have to say… Yeah, honestly, I would say a person that I think a lot of people look up to and has contributed a lot to the space is Netter who has previously at The Graph. I think he is one of those people in the space that just fully open and honest then and has done a lot for the space, onboarding new people, and educating people. So yeah, if you want to follow someone, I’d say follow him to learn more about web3 if you’re just getting started.

Nick (51:28):

And then lastly, complete this sentence. I’m happiest when?

Nico Vergauwen (51:32):

I’m happiest when I can just work on Tenderize, honestly, or when I can just relax with family and friends in the weekend. But other than that, yeah, I’d say those two.

Nick (51:54):

Nico, thank you so much for joining the GRTiQ Podcast. You’ve been generous with your time and I really appreciate the overview you provided of Tenderize. If people want to follow you and see what you’re working on, what’s the best way to stay in touch?

Nico Vergauwen (52:07):

Yeah, I would say join the Tenderize Discord. I’m active every day there answering questions that people might have. I’m also on Twitter, nico_eth. You can follow me there if you want. Yeah, my DMs on Discord are open for people that want to talk about Tenderize, about staking, or web3 in general.