Sebastian and Marek built H20, a non-pegged stable asset designed to become the Decentralised Data Economy's stable medium of exchange. We look at what's next on the roadmap for H2O and talk about what it was like launching into a volatile bear market.
Thanks to the Ocean Protocol Ambassador's Programme for Sponsoring this podcast. Learn more about the programme here: https://oceanambassadors.community/
Yeah, as you just mentioned, I go by Sebastian and I basically come from a long background in financial institution. So in the financial industry, mainly banking and insurances, where my main occupation was, leading the implementation. Data driven initiatives, such as process automation, digitalization of financial processes.the blockchain industry since:
So I decided to find, a way to get. Closer involved. And that's how I got in touch with, with Merick and Sammy and the New Order, and one thing led to the other. And, and basically my passion for data, brought me all the way to H2O.[: [:
I, I don't know if this is really gonna take off. Right. So like, you know, years passed before. You know, I, I, I really started seriously looking at it. , but I noticed that, you know, it kind of wasn't going away. Right. and then, one thing led to another, I, you know, I'm sort of a recovering academic now.but, you know, back in:
after my first startup was sold, for the technology. I, went to go work with, block science, along with some brilliant people, including, Michael Zargham over there. And block science is, you know, sort of like a consultancy, that does, token engineering work mechanism design for, you know, many of the top, 100 projects, you know, top crypto projects.[:
And what new order does is it helps. To,incubate and spin out. I would say very, you know, very innovative, defi protocols. So, I'd always been a believer since, you know, maybe around like 20 10, 20 11, in, data as an emerging asset class. Right. And then, you know, through sort of our connections at new order, we actually got to talking with ocean.
and this idea of, H2O this stable asset, that, would, would be eventually backed by data, sort of, you know, kind of came. And, we, we actually met Sebastian, through new order, really liked sort of like, you know, the, the cut of his jib, good vibes coming from Sebastian clearly a, you know, I would say an innovator and a leader in the space.[: [: [:
Which, I mean was, an obvious choice. Ocean is the closest that we have in the Web3 space as, proxy to the value of data. So that's why, it, it was more than an obvious choice. So H2O, as I said,is an over colateralized, stable asset. We, pretty much exercise the mechanics of.
Reflex. RAI. so we are very close to RAI and MarkerDAO in terms of, mechanism and, and how the protocol functions. but in comparison to RAI that is backed by ETH, H2O is backed by ocean. So in that regard, we. Perhaps say that we are kind of in the, on the road to data back. Right. And we also recently became available as a base token for the ocean marketplace.
So as of now, people can also value their data on the marketplace,utilizing H2O. And benefiting from a stable pricing and productive revenue, right? So we are positioning ourself, in a way that we can serve the data economy, with a stable, let's say medium of exchange and unit of account for data marketplaces, and with, with, with the aim of eventually becoming also backed by actual data.[: t. I think year the, the year: [:
keep this, non-pegged, token at some form of stable value over[: [:
Fiat currency, that first started and it's also an over collateralized, protocol. So as you might have followed after the collapse of, of Luna terror, there was also a very bullish narrative towards protocols, such as RAI. And, and, and maker, although they're not very capital efficient, it, it just has historically proven to be a superior model.
on the other hand to touch on what you said about data backed we, we really see that as one of the major strengths of our. Over protocol and, and what we are trying to achieve with it. Cuz as a team, we, we really strongly believe and I think yourself included that data is a very strong asset that has, intrinsic value.[:
what I can maybe add to that, or, or Meric, maybe if you want to, to dive bit in the specifics of the mechanics on, on how the, the H2O protocol differs from, from other stable assets, let's say, In[:
when you have something like,, like a peg stable coin, right? That's, it's maybe, backed, in theory, a hundred percent backed with, You know, with, like, let's say, let's say us dollars, for example. Right. you know, there's, there's a lot of different sort of challenges there, right?[:
I mean, I think that's, the courts will resolve that two course. Right. But, yeah, we, we actually have some really cool mechanics that make,H2O I would say like kind of, much more decentralized. Than those other models. what's actually super cool about it is, H2O being a fork of, reflex RAI protocol, uses a, I would say like an innovative mechanism, in that it has, what's called a P I D controller, which stands for, proportional, integral derivative controller.
Which is a,very popular, type of control system that has been used widely in, in the engineering space, in for many different applications, for decades, right. It keeps airplanes in the sky. Well, you know, lands rockets on the moon, these sort of things.
And, , we, we were watching like RAI and other stablecoin, you know, stable asset, whatever, whatever we wanna call that mechanisms. for some time, including like we considered liquid. we ended up landing on RAI because we, sort of looked at its its performance history, over its lifetime.
we saw that, you know, even though the price of, ETH fluctuated, wildly, over, RAI's lifetime, the RAI, stable asset, was, was able to maintain. You know, a fairly kind of constant,price level, right? So the way that the P I D controller works just, just intuitively is, you know, what, whatever the price, is currently at, the P I D controller adjusts, the, redemption rate in such a way that it incentivizes.[:
And,, then, you know, we're watching the, data economy, right now. And, you know, we're, we're, we're sort of watching closely to,find out which kind of, you know, data assets sort of have the most. Let's say like longevity and, and develop like, you know, like the deepest liquidity and volume and, and things like that when, when we're gonna be choosing, the data assets that will go into, backing H2O.
Oh. you know, later in the roadmap.[:
and you know, the kind of, visions and promises of, of crypto and web three is, is all around this, like entirely new. decentralized distributed financial system, and without a quality stable asset, you know, it's, it's essentially fundamental to, to the ecosystem, you know, prior to the, even just being these sort of USD backed, stable assets in the crypto ecosystem, it was a completely different place.[:
use case, sort of waiting to be picked up and then this idea of, of essentially using data, as, as a form of collateral. So in the, in the physical world, , you might have piles and piles of, of gold bricks and you say, okay, cool. We're gonna now, you know, print money on the top of, of, of these gold bricks.
but inside of this, this digital. ecosystem, you know, you're taking something which, which actually, you know, is, is the digital, collateral kind of equivalent in terms of it's digital by nature. It has intrinsic value. you know, that value can last over time. And obviously if you have the ability to, you know, add to your store, Data assets over time to increase that collateral, you know, kind of increase the, the money in the bank, so to speak.
then, you know, you're, you're able to kind of, begin to, to produce more stability inside of that system. And, and you know, that in of itself is just a pretty fascinating kind of concept, to, to all come together. So, I was just wondering, In terms of, of the H2O stable asset and how it's, designed at the moment, are there any sort of known, weak points that, that you guys are, are aware of or sort of working on to, to mitigate at the moment?[:
So I think. what could be considered, let's say a wheat point is, it's over exposure currently to the volatility and the long term trends of, of, of ocean. so yeah, for us, it's, it's very important to, To also diversify right. Or diversify or, or, or, or backing, and therefore create also more use cases.
And not only that, but which I would not consider weak point, but it's just a fact of the matter is that the data economy in the web three is still very nascent. So, it's, it's a matter of time. we, we definitely believe in the strength of the ecosystem itself, but as of today, right now, I would say that that kind of hinder adoption.
but that's, that's not, I mean, that's a trend overall in the space.[: [:
so you might, you've probably heard by now, right. That O ocean's gonna be, deploying like a, like a, a VE ocean, right. Which is like, you know, voting, voting, escrow, mechanics that's, you know, been popularized by protocols, like probably most famously like curve. Balancer sort of like others. Right. you know, it, it, it's actually really great token, token mechanics, token, token economics.[:
So that, that, that still has the benefit of, you know, keeping us very close to kind of what we're kind of already doing. but you know, sort of just crossing that, what do they call it? Crossing the Rubicon, right. That's I guess the expression right. To, to having, multiple, multiple asset types, even though, even though, you know, PSDN ocean will be a derivative of ocean, right.
That that's that's like plan, so correct. yeah. Yeah.[: [: [: [: [:
Right. But it's yeah. It's only been April. So we had April, may, June, July. August. It's about six months, right? So about half a year ago. Yeah. It's been a long, it's been a long and interesting ride. Yeah,[: [:
So extreme volatility, in the market's also influenced I think, our lunch, but at the same time, let's let's see the positive side of things. We got, the pleasure and the courage to battle tester. Or mechanics very early and see how the protocol, pretty much handles, huge markets, drops.
And, we are happy to say that everything works as intended and, that that's, we, we got to battle this, the, the protocol very early and for the people who are using it, I think it has been a, a pleasant journey as well. And, and we we've seen. Also growth now with the introduction of H two as a base token, and, and as more data is, is added to the marketplace, we're confident that we can only see more grow in adoption.
So I think so far we are. Relatively happy with the results and, and, and very anxious to, to keep on building.[:
Like we launched like literally, like days later the market just dumped and it was just, I remember we were on the phone, like, like quite often, right. It's like, wow, this is just re. Market , you know, like the entire crypto market and, you know, like stocks weren't doing well either, you know, it was just, just really, really a terrible time.
So like Sebastian, I'm also hopeful that like the worst is, let's say behind us. Right. And maybe there'll be a bit of sideways action, but then, I'm hopeful. We get to sort of like up limb mode in crypto before long again.[:
I would say stay calm and move fast.[:
From those days, it's more, it's like a little bit like, You know, doing a sprint. Right. And then like, as soon as the sprint is done, now you start running a marathon. Right. Like, I don't think that that exists in the sports world. Cause it sounds pretty like Savage. Right. But like that's, that's literal literally kind of what, what it's like and yeah, I mean, it's quite a bit of work to sort of, manage and, and, and operate one of these protocols, right.
Like much like, reflex does, there, there has to be like a lot of, kinda like off chain processes that, that, that you have to be maintained. And it's, it's a, it's a lot of curation, right? I mean, especially like early. When a project launches, usually around project launch, that that's sort of, I would say like when a project maybe like at its, at kinda like peak centralization, right.
And then like things, you know, projects kind of tend to decentralize over time and, or take steps to decentralize over time. So, you know, I think it was especially maybe challenging, right. Kind of early on when there, maybe weren't like a lot of adopters very early on, you know, to sort of just be.
Just sort of be, be those, those sort of few people that, that were, working with the protocol. So, yeah, I think, I think we just, as, as a team, right. I think we, we learned to,kind of like overcome, let's say adversity kinda like hang in there. Right. Just through, through like just sheer grit.
Right. And, and, just really hang in there. Right. I mean, you know, crypto's great comes and goes in cycles, but you know, the, the folks that. You know, are, like kind of hang in and they, you know, they don't end up being tourists. Right. And both me and Sebastian have been sort of at least through at least through one market cycle before this.
Right. So like, it's, it's easier to stay calm. once you realize that this is just sort of, just sort of part of the cycle, right. , many other, I would say stable assets. Maybe haven't haven't fared so well. So like, I, I mean, I think that we're, we're, we're grateful,it's sort of like blessed that we managed to kind of like hang in there.
And I think it's a, it's really a Testament to, to, the strength of the ocean community, the ocean ecosystem. And also like, I would say like the, the, the very, strong,RAI mechanics that we, we implement.[:
Right. And, and to, to be able to pull through that, to, to still be working on this to, to still be, planning, future releases and updates and all of those sorts of things. And,sticking true to, to your, to your gut in terms of, how important this is and, and how much it needs to, to, to be built and come to life.
Definitely it's very admirable. and I think, the, the fact that you guys are still here and still doing it is, it speaks a lot in terms of both the character of yourselves. And then also, your sort of commitment and dedication to the project. you know, I, I think I, I don't wanna put words in Sebastian's mouth, but I mean, we, we talk quite often, right. I think I, I would speak for, you know, say like, we are like just turbo bullish, right? Like, data economy, DataFi, and like, you know, just the bright future of this space.[:
Some of the, the frequently or commonly asked questions that you get from people when they're first trying to wrap their head around, what H2O is and, and how it sort of works.[:
And, and especially at the early days, there were a lot of concerns in how, how similar we are, to the mechanics of Luna. So often we had to explain. how different, how different we actually are and that we were not exposed to the, to the same type of risks. so I think that was, has been up till now.
I think the, the main point of confusion, the non-pegged aspect of the protocol.[: [: [:
The idea of, of a target price is often is often a point of confusion, right? Yeah,[:
is there some other. Key obstacles that you guys are currently working through, to get this thing up and running, or is that mostly the, the, the main ones.[:
In at the beginning of a bear market, also, as you mentioned earlier, we are at, at a very early days of, of the data economy in the web threes. So. Adoption and all these things will, will come organically. We believe so. We don't see them much as an obstacle as for now. but yeah, I think we we've touched on, on, on the main challenges for our protocol.
And from now on forwards, we just keep on building and I think we have a, a beautiful over the head.[: [:
Yeah, of course. So I think the, the big question is also like in three to five years, where will the data economy in the web three B? Right. So we, we kind of build edge through with the idea and with the belief that the data economy. Really a multi-billion, potential also in the web three, as, as it also historically did for the web two, we see this translate, through our time to the web three.
So from, let's say three to five years from now, I think, the whole space will be much more mature and, and, and yeah, H two thereby will be positioned as dominant medium of exchange, unit of account for this data marketplaces. so we, we consider this, integration of the ocean in the ocean marketplace is pretty much a, a starting point of this.
And, and, and, and it's, it's very nice to see how the whole DataFI ecosystem is, is kind of coming together with. With other protocols who are also big believers in, in the space and are, are pretty much paving the way for, for us to achieve that, in, in, in the future, as you say, three to five years from now.
So that's, that's pretty much how I see it. I don't know. Merick if you would like to, to give some[: [:
Right.[: [: [:
That's sort of where I learned about, you know, data as an asset class. I think this report. you know, it's pretty old. So, you know, from, from around like 20 10, 20 11, you know, and, and it definitely started talking about this, this, this concept, of, of data as an asset class is like a trillion dollar opportunity.
So like in three to five years, I'm convinced that, we're gonna be well, well, well done the path to sort of realizing this stuff, right. I think, you know, governments, I think, especially in Europe, right. Are, are, are taking steps to, you know, like move regulations forward.
Right. You know, starting with GDPR,there's been other regulations since then, like I'm, I'm not a lawyer or like a, you know, regulatory buff. Right. But I just sort of see things, you know, moving in the direction of giving people. more rights over their data, right. And, and more rights to like monetize their data.
Right. Where I think the status quo, I think still to this day, right. Is that, people implicitly pay for a lot of the quote unquote free services that we enjoy, right? Like Instagram and maybe Twitter, you know, at LinkedIn other services. Right. Which people don't pay for those, but they kind of implicitly pay for those things by, with, with their data.
Right. And I think that what, what, it's probably gonna. you know, and I, you know, I see, I sort of see a path to this right. In the coming years would be to make those, sort of, you know, economic relationships, just, just simply more explicit, right. Instead of being buried into like 150 page terms of service, right?
Like, like the, you know, what, what data tokenization, you know, what, what, the kind of things that ocean's been building over the last few years are gonna actually enable. You know, those, those transactions to be, much more explicit. Right. And, and, and let or ordinary people sort of, take advantage and, and, and monetize those.[: [:
yeah, that that's certainly one, one side of it. And, and, and the other side of it is that, you know, you know, once people are able to sort of like tokenize their own data and, and, and, and, you know, sort of like take, take ownership of it, so to speak, you know, they're gonna probably wanna use it in, in different, You know, like essentially use it in, in, in, in DataFi.
Right. Which is sort of like a, the next evolution I would say of, uh, decentralized finance, right. It's gonna be finance that is,essentially data backed and that's, that's really the future that we're building towards. Very[: [:
So, the VE model, as, as Merick mentioned, popularized by by curve, allows for several place. Right? So, The opportunity that we saw is to build PSDN ocean, which is basically like a liquid staking wrapper for the ocean. Right. this is good for ocean protocol as it's pretty much, locks of the liquidity, the ocean.
So we, we users, can, can pretty much, so ocean holders can log their token. Interacting with the PSDN ocean contract, right. Which will then in turn lock ocean in the ocean for the maximum period of time. Right. As a token of confidence, to the protocol. So it's pretty much, comparable to the curve play that we're doing.
So then the N holders, PSDN ocean holders, will be able then to stake and get a share. The revenue generated by, data farming and locking the ocean. So this generates basically an opportunity for real yield, and, and a more sustainable model for, uh, HTO itself. it also creates, the possibility for, PSD and hold, right to, to have the ability to, pretty much choose.
where, where this, this liquidity, so the, the, the VA ocean will be allocated, right? so this adds, this pretty much adds this, defi primitive layer to the DeFi economy, creating opportunities for this whole new layer of defi place. Right. then further down the line. as we previously mentioned, we are looking into adding so modifying our code base to add, multiple assets, capabilities, right., in the future toward earth,: [: [: [:
So you can find, all the info there and we re regularly post, new updates and stuff.[:
and you guys are basically one of the very few people in the world working. Something that is this, this sort of novel and, and, and interesting in this space. So, yeah. you know, huge, huge, appreciation to, to you guys and everything that you're doing and looking forward to, to seeing it all come to life.[: