#citizencosmos

  • Episode link: https://www.citizencosmos.space/shapeshift

  • Episode name: Willy Ogorzaly, values, DAO's & the best day ever

Transcript of the Episode:

[00:00:00] Citizen Cosmos: Good space-time ya’ll! Welcome to the new Citizen Cosmos episode, and today we have Willy Ogorzaly with us, the head of the decentralization at the ShapeShift DAO. Hi!

[00:01:33] Willy: What’s up, everyone? How are you?

[00:01:37] Citizen Cosmos: Great! How are you? How is the sunny state of Colorado?

[00:01:39] Willy: It's a sunny day out here, I'm having the best day ever so far. What about you?

[00:01:44] Citizen Cosmos: Good, also sunny. So, ShapeShift. So much noise, so many years, such a big project. Do you want to maybe introduce yourself and tell us a little bit about what you, what does it mean to be the head of decentralization?

[00:01:59] Willy: I've been part of ShapeShift for almost four years now, and I had the pleasure of being a part of it when it was a centralized corporation then, last year in July, we announced that we're becoming a DAO, and over the next six months we worked on transitioning from a centralized corporation to a DAO. Employees were let go in three waves, and meanwhile, we were building up the DAO deploying work streams. Things have been going well, we’re about nine months into this DAO journey. The Shape has pivoted a bit so when we first started in 2014, we were the first non-custodial exchange where you could trade crypto across chains from your own wallet rather than depositing it onto a centralized exchange. It started right after the Mount Gox fiasco. It was built as a solution to having to deposit funds onto a centralizing exchange and give up trust, so we were doing cross-chain trading before d5, before DeX, and before Ethereum. So when we saw the advent of these decentralized exchanges, we were impressed and realized that these decentralized exchanges were doing a better job at ShapeShift’s original vision and that way to do this was to decentralize protocol so that you could list any new token as soon as it came up and be permissionless so that people could come to list their own tokens. We embraced these decentralized exchanges, integrated the DeX and Etherium, we integrated Thor chain the day that they launched mainnet. The day that we integrated Thor chain, we sunset our own trading desk, so now you can think about ShapeShift as a free open source community-owned and soon decentralized interface between users private keys and decentralized protocols. We support multiple wallets, we support multiple chains, and we support multiple protocols on those chains. Now, you can come and buy, sell, receive, trade, and the yield on cryptos on 11 different blockchains.

[00:03:42] Citizen Cosmos: And it's all non-custodial, right?

[00:03:45] Willy: Yeah. Non-custodial is our core value. We’re all about financial sovereignty, and another one of our core values is the multi-chain future we've always believed in Shape. We love Etherium, we love Bitcoin, we love Cosmos, and Shape is the interface where you can do things on all these different chains and even across chains.

[00:04:03] Citizen Cosmos: Tell me about the journey. In crypto, a project that has worked for 8 years now, that’s like history. How was this journey for you personally?

[00:04:18] Willy: For me personally, it's been an awesome journey, and we've been through several market cycles. We've seen a lot of ups and downs. My first experience with ShapeShift was in 2017 when my friend showed me an easy way to trade, and I just thought it was so cool I've always liked altcoins and cool visions, so I'm always looking for the next hot thing, and so at the end of 2017 I started a company called Bitfract, and it was the first tool where you could trade Bitcoin for multiple cryptocurrencies in a single transaction. It was built on top of ShapeShift, you could buy any of the tokens or coins that ShapeShift had supported, and you could choose what percentage you wanted of each coin, send in Bitcoin, and then we’d use ShapeShift to execute trades and then send all the crypto to you whatever addresses you had put. That was a pretty awesome experience and six months after we started that, ShapeShift acquired Bitfract and we were brought on to a team to build a new version of ShapeShift. This is the time when ShapeShift was realizing that the original exchange model had regulatory issues with it and we came to the conclusion that we needed to implement KYC to continue offering trading functionality. Before KYC ShapeShift was the leading way to trade crypto non-custodial and after we implemented KYC we lost a lot of our users and our volume and our revenues. A lot of our existing users started in even wallets that had integrated ShapeShift to power their trades and didn’t want to start requiring KYC so they implemented a lot of the copycat projects that had kind of done the same thing that ShapeShift had done but without requiring KYC. That was a tough couple of years. We had to spend months building this KYC functionality and not only into our products but into our organization bringing on compliance teams. So that was a lot of effort that really ended up hurting us more in the long run and I wish we could go back in time and just realize that we should just stop the trading thing now, we shouldn't go down this centralized route, we should instead start embracing these decentralized protocols even though the centralized exchanges weren't quite feasible yet. That was one of the challenges. We didn't have the option at the time to just plug into these centralized exchanges because they hadn't been built yet. So retrospectively that was probably not the right decision but at the time there were reasons that it made sense for us to make that switch at the time. Once we saw the decentralized exchanges actually working and able to handle the liquidity and the volume that we had with our users, we immediately integrated them. Since then things have been going great, we were able to remove KYC which made our product better. Now, as a DAO, things are going better than ever. Some of the differences before ShapeShift got decentralized, we were closed source so we could only build however much as we had internal bandwidth to build and there's so much to build in the cryptocurrency world. We wanted to integrate all these protocols, all these chains we were always limited in how much we could prioritize. Also, things were pretty secret at ShapeShift. We had a big separation between the internal employees and team and our actual users in the broader community and I always hate it. We'd be working on cool stuff but I couldn't talk about it at conferences, I couldn't tell anybody about it until it was live. Now everything is open, we have public meetings every day in the discord and anyone can just come in and hang out which is really awesome. I like being able to be just fully transparent and it's powerful because now we have the support of the community in ShapeShift. we have such an awesome community because we have been around for so long. We’re a recognizable brand and we recently deployed an airdrop after a million users joined us. One of my favorite parts about the DAO is just the awesome power of the community builders all around the world coordinating every day and coming up with cool ideas, sharing their unique perspectives to achieve this vision and we are now moving faster towards this vision. We're spending less than we did at a centralized company, we're earning more revenues and this is nine months into it so we're just getting started.

[00:08:17] Citizen Cosmos: This is fantastic! We’re all here to see how products progress from centralization to decentralization. In your opinion, how should the applications be launched in Web3? In decentralized manner or start centralized and move towards decentralization?

[00:08:55] Willy: It's a really interesting question! I'm a big fan of decentralization. I think the sooner you can get to that the better. When ShapeShift started it wasn't possible to be a decentralized organization. We had no choice. But if I were starting a new project today I would absolutely push to start it as a DAO because once you do start it as a centralized organization, then it's more difficult to transition to a DAO. With a Shift, it was pretty interesting though. Huge props to Eric and John for getting our shareholders on board with the idea of transitioning to a DAO. There were some advantages. The fact that ShapeShift had been around for a while, we weren't just starting from scratch we had a community, not just our internal employees who all knew each other and worked together well but also our users, so I think that was pretty advantageous and we were able to do a lot of work as a team internally to then launch the DAO successfully. We were able to build the DAO stack, build the governance process and gift it to the community. I talked to a lot of people now who are working on new projects and I encourage them to go the DAO route because it will pay off in the end. I also think progressive decentralization is important. You don't have to start day one being fully decentralized - it is difficult, right now there aren’t many tools where you can do everything you need to do as an organization in a decentralized way. But as long as you're progressively getting more decentralized and as long as you're transparent with your community about where points of centralization are, then I think that's fine and you can work together as a community to address each of those points.

[00:11:02] Citizen Cosmos: As somebody who has already been through the whole journey of going from a centralized to a centralized company, what would be your number one advice to those who have already started doing their projects but not in a decentralized way?

[00:11:24] Willy: I think it's a challenge when you want to launch your DAO but you want to make sure that you're ready to launch the MVP and ideally an MLP. You don't need to have everything figured out as long as you have that core framework where people can come in and pass proposals and start contributing and coordinating. That's a great place to start and once you have that, you need to some dank memes. You need to make it really clear what your DAO is about, and why anybody who hears about your DAO should be interested and get involved. How can you distill that into a really clear and like Bitcoin. ShapeShift is like the one-stop shop for cross-chain DeFI. I think we still need to work on that mem so it's catchy. From that you know you can have all the actual cartoons and pictures and funny stuff that go viral and capture people's attention but that's so valuable because the DAO is all about the community and so you need to start building that community. I also had experience working with Giveth. That was amazing to see unfold in real life when people all around the world just come join the community and say they believe and share the same vision. It's so powerful and you need to make it really clear to somebody why they would want to get involved with your community and then make it easier for them to onboard. Think about the user experience of like somebody who actually then lands in your Discord, they land on your form, how can you make it really easier for them to get engaged start contributing and then reward them with your governance tokens? You can figure out that cycle where people can hear about your DAO, get involved, become owners, and contribute and add value. Then you're off to a great start and the rest can just be built by the community.

[00:13:14] Citizen Cosmos: In your opinion, is a DAO suitable for any type of product? Let’s say podcast? What would DAO do in a podcast?

[00:13:25] Willy: I like to think that DAO really can apply to just about any business. First of all, DAOs can be designed really however you want. They can be flat, they can have a hierarchy. When you can have a podcast company with shareholders or a podcast DAO and bring each of your guests, you can give some tokens so that they have an owner in your DAO. You can create just about any kind of business, any organization, you can either do it with a bank account and with a legal entity or you can do it with a treasury on a chain. It now makes the most sense for these digital communities or technology software companies or protocols, but I don't see any reason why it's in the future it's not going to be easier to start a DAO. With a DAO, you’ll be able to do all the things you can do as a centralized corporation except for having bank accounts and can't sign contracts but everything else you can do. There’re multiple things you can do with DAO. Why would you start an LLC if you could just go online?

[00:14:30] Citizen Cosmos: I really don’t understand why anybody wants to start LLC. That’s crazy. You have a good point. The idea of minting NFTs and giving the to guests and then listeners has been on my mind for a while. I have a slightly different question. What is the future of DAOs? Where are we headed? What’s it going to be in 5 years?

[00:15:12] Willy: I think we have barely begun to scratch the surface of like what's possible with DAOs and you can just see where DAOs are today and where they were a year ago or two years ago. It comes so far, and they're continuing to innovate, and now the pace of innovation is accelerated because there are all these real doubts that need solutions. There's a huge opportunity for entrepreneurs to build these solutions. I think we're just getting started, and what we’re making at ShapeShift we’re solving most of the relevant problems. Our goal is to dissolve ourselves, and we will do that once ShapeShift is completely decentralized, and there's no need for the illegal entity, no central points of failure. Our mission is to remove all the central points of failure, and replace them with decentralized alternatives so that we can dissolve ourselves and pass complete control over to the community.

[00:16:30] Citizen Cosmos: It's interesting you mentioned values goals. What was the original motivation for ShapeShift to be created? And what is the big goal of the DAO right now?

[00:17:20] Willy: I would say we stayed true to our values from day one and the core values that were founded on financial sovereignty enabling financial sovereignty for billions of individuals across the world borderless, unstoppably, trustlessly. I think we've done a great job sticking to that, and people also always believe in this multi-chain future where there's value beyond Bitcoin, beyond Ethereum, and that if this feature is going to exist, then there should be a way where any individual can access this feature in a way where they're not giving up custody or trust or they can't be censored or stopped. So I think that’s cool because the industry has evolved around us and so the way that we've tried to tackle that vision has evolved absolutely. Now, we are embracing just all of these decentralized protocols that new ones were getting built every single day, and I just think that's so cool. It’s hard for me to imagine a more important mission. If we can enable that and bring that to the masses, that is going to have more of an impact on society than anything else that I can think of. You can have all these cool decentralized protocols but if the actual interfaces themselves or if they back in the blockchain data the user needs to be able to access this itself decentralized and we can't really enjoy this decentralized future. So ShapeShift is in a great position to solve that because we've been running nodes interacting with these chains since 2014. We have a ton of experience doing this and doing it in a noncustodial way. Not only do we have this amazing team that's been working at ShapeShift for eight years but we've got this awesome community. Now that we’re open-source, we’ve been putting bounties on GitCoin, and ShapeShift is now a top project on GitCoin for putting bounties out.

[00:19:30] Citizen Cosmos: This is so cool, man! I didn't know that ShapeShift was the number one project offering tasks on GitCoin. What is now the main goal of the DAO except for financial sovereignty?

[00:19:59] Willy: If you go to app.shapeshift.com, you could see the new Cosmos functionality. It's beautiful, it's super easy to use, and they're no fees added ever so you can think of us as an aggregator. We build really great UI/UX, and you can come to apps.js.com, buy, sell and receive and yield in crypto all for free and across chains. So our trade page it looks a lot like uni spot where you can trade one asset for another and put the amounts but it's also got a Thor chain in that same interface. Not only can you trade all the Ethereum assets but you can also trade Ethereum for Bitcoin. The way we're building all this, too is with abstraction layers so that we build one UI/UX. We're constantly optimizing that and then any protocol that shares that same UI/UX, which is like a lot of the trading protocols like an exact lot of lending protocols, the same a lot of the single asset staking yield protocols. You approve the token, you choose the amount you deposit, and you see numbers go up, so the way we are building things is so that once we build this UI/UX, it's very easy for other protocols to integrate themselves. For example, the first yield generating protocol we integrated was yearned, and right now we're working on the abstraction layer, and we have idle finance ready to come to integrate them or put a bounty up to get integrated, and we're actually going to partner with them on this bounty. They're going to put up half the funds from their treasury, we're going to put half the funds from our treasury, and then anyone in the community who wants to come to integrate idle can just come to plug it into our existing UX/UI. Now that we have Cosmos support, it’s very easy for us to support all the Cosmos zones. There's a bounty also up from Osmosis, this is another joint bounty from the Osmosis community to get integrated into ShapeShift, and this is in progress. and now that our Cosmos support is much easier for us. Soon, Osmosis will be sending, receiving, staking, trading and liquidity providing, and bonding. Then we want to support all the Cosmos zones. If you're Cosmos dev listening to this, come integrate yourself into ShapeShift or come put a bounty you have to get integrated. The other reason I'm excited about is bridging. Enabling bridging between Etherium between Cosmos so that in one place, you can connect your Keplr, your metamask, or you can connect the ShapeShift wallet, and it supports both. All free, open source, and soon - fully decentralized.

[00:22:32] Citizen Cosmos: This is my next question. When are we going to see foxchain on Cosmos?

[00:22:39] Willy: If you guys haven't heard about fox chain it is the new Cosmos zone that's under development and collaboration with ShapeShift, and we're also working with coinbase cloud on building this out, and they've been awesome. Shout out to coinbase cloud team. It's in the early stages of development; we're in like the research phase right now so we're kind of designing all the protocol, we're doing models, and stuff with tokenomics. Basically, what a fox chain is, it's a network to incentivize node operators to provide blockchain data to end users. We need this for ShapeShift to be decentralized. We've always operated the nodes ourselves, but we need in order to fully decentralize and for the foundation to dissolve we need to have another source of blockchain data, ideally a decentralized source. That doesn't exist yet so what fox chain does is incentivize node operators to run nodes for any blockchain they want to run notes for it and then get rewarded in fox tokens. We need it for ourselves, but any DAO that actually wants to be decentralized and not just run their own nodes can plug into fox chain to get the blockchain data they need for their users. We’re expecting in to launch in early 2023.

[00:24:40] Citizen Cosmos: When are you planning to launch the first test net for validators to come in already? Is there going to be an incentivized test net before it goes live in 2023?

[00:24:46] Willy: I'm sure there will be a test net, and I think hopefully, once we complete this research phase will have a better timeline for when that could be available.

[00:25:00] Citizen Cosmos: So the most important question - when airdrops of the new fox chain?

[00:25:02] Willy: That's what we're figuring out right now

[00:25:08] Citizen Cosmos: I see. So basically, is there any alfa? Should people go and buy more fox tokens now on Ethereum to get more airdrops in the future or not?

[00:25:18] Willy: I think I'm not supposed to say anything about that.

[00:25:20] Citizen Cosmos: I know, but still, I’m looking forward to that because. I have a controversial question. It’s a made-up story. You said that you know the first day you started working in ShapeShift there was the whole thing with the introduction of the KYC. Obviously, now things have changed, and things have progressed again. Who is to say that the foundation is still there or some of the company is still there, and something bad happens like the authorities would come and ask for the valuable data? Is there a possibility of it, considering there was such an incident already?

[00:26:22] Willy: As a foundation, we don't have that data so we specifically made sure that we receive the data necessary to continue operating ShapeShift legacy infrastructure until we could send, edit and migrate all of our users to the new open source which doesn't require KYC, doesn't have any tracking. The KYC laws require you to keep the data for five years after collecting it. But ShapeShift is required to keep that data but right now is pretty much operating in a skeleton mode. Almost all the employees have moved on and there's just a small skeleton group that's keeping ShapeShift alive basically for tax purposes this year and maybe just to like to be the custody of that data which is all encrypted, stored offline in cold storage. The data that we didn't want to collect but had to. We followed the rules. Fortunately, there was no reason for the foundation to receive this data because we don't need that to continue operating ShapeShift, so we specifically made sure that we didn't have access to the data, so if the regulators come to ask us for it, we can’t give it to them which feels pretty good.

[00:27:28] Citizen Cosmos: I understand what you mean - the less you know, the better you sleep. What is, in your opinion, the future of KYC and web3?

[00:27:48] Willy: I am excited for civil tools like the ability to know that an individual address is a real person. As long as users are in control of the data, they can choose whether or not to share their data. I think it's a much better status quo than we have right now and especially if there's options to do the thing that you want to do in finance without being required to share that data. Then I think that's a better world. I personally think that KYC is kind of ridiculous: requiring people to give up all their private information when normally it's like innocent until proven guilty, but here were assuming people are bad actors, and then it's a bad risk it's like we're just a honey pot. All this data that time and time again is going to get hacked, so I'm excited about the potential for web3 to enable users to at least have control over their data. I do think that there probably will be on-chain KYC types of things that do get built, and I probably won't myself use them. Maybe there are some benefits, maybe there's no potential for benefits, maybe it's possible that the people can come up with reasons. I don't think it needs to exist, and I believe in free sovereign finance, and we don't need KYC for that, so it will be interesting to see how it all plays out. These KYC protocols will get built, and some projects will choose to implement them and require them, and whether or not those projects can compete with the decentralized alternatives that don't require that, it's hard for me to imagine we'll see what they can come up with.

[00:29:10] Citizen Cosmos: I have a slightly different question. When I go on your Twitter account, you have a .eth nickname and laser eyes. How does that work? You have to explain this one.

[00:29:45] Willy: Ethereum was what got me into the space for sure. It was the first crypto that I bought, but very quickly, I became a fan of Bitcoin and I have a lot of appreciation for Bitcoin I personally think that Ethereum will flip into Bitcoin but who knows what's going to happen I definitely believe in a multi-chain world. I think that's a good way to just show that. I love Ethereum, but I also like Bitcoin and am open to other chains. I reject tribalism, and ultimately I think the real enemies are the banks, the legacy centralized infrastructure, and the regulators but not each other. We're on the same team, and it hurts me to see that the The bitcoin community is becoming so toxic and so maximalist. If the Bitcoin community continues going in that direction and Ethereum continues going in the same direction that is going, maybe I will get rid of the laser eyes.

[00:31:02] Citizen Cosmos: What is the value in your opinion of Bitcoin today?

[00:31:37] Willy: Before crypto, I used to like gold, so I really believe that fiat is the biggest evil, the biggest scam in history, and so I'm a big fan of hard money. I think Bitcoin is doing a great job at solving that. However, it's possible that Ethereum is going to do an even better job. There's not a lot you can do with your Bitcoin right now, and I see the transact fees that Bitcoin is generating right now. I see how much it costs to secure the network, and the block reward is going down, and right now, it's not clear if Bitcoins' actual model is going to be sustainable. On Ethereum not only can you do anything and have all these decentralized finance protocols that add a lot of value and that people are paying a lot to use because it's worth it, but Ethereum can also be money. If you can have hard money that has a utility that people are willing to pay for and have a monetary model where it’s deflationary but still sustainable, then that could be better than being sound money than Bitcoin, so I'm open to that. But right now, Bitcoin has a lot of liquidity, and it can still enable people to have financial sovereignty and to hold their own money and to send it to anyone across the world unstoppably, and so that's still very valuable I still think that's super freaking cool, and I appreciate everything that Bitcoin has done to enable what Ethereum and other blockchains are doing now.

[00:33:00] Citizen Cosmos: Yeah, I agree on most parts, though I’m not as enthusiastic about Bitcoin as you are, especially with all this toxicity.

[00:33:25] Willy: Actually, I got rid of my laser eyes a couple of days ago. I put a new picture. I did it because I didn't want my credibility to be hurt. However, I think Bitcoin needs to be worried because if Etherium can be better at being the sound money that right now they're, Bitcoin can’t compete. But Bitcoin has a strong community, they got a lot of supporters, and we'll see if they're able to survive I would be happy to live in a world where we have Bitcoin and Ethereum and they both co-exist.

[00:34:37] Citizen Cosmos: I have two more questions. The first one is more like a story about ShapeShift decentralization. How did somebody suddenly bring it on board? Can you deeper into the story?

[00:35:33] Willy: Shapeshift in early 2021 started going down this path. We could see a lot of the projects that were best achieving similar visions were structured as DAOs. A lot of the top DeFi projects were DAOs. I also had first-hand experience with the project for the hackathon, which was the DAO to save the world. We got first place and immediately afterward started building it, and we ended up joining forces with Giveth and building out the new version of Giveth. We built a DAO, we launched a token and built a community, and it was amazing to experience because I was able to do that in my free time. This was actually during the pandemic, so quarantine, lockdown, it's a perfect way for me to stay busy, so every week we're just having these community calls, and more people are joining the community. We built a beautiful product from scratch without any fundraising, just off of donations. That was pretty amazing to see when we were figuring out what is the best path forward for ShapeShift, and what's the best way we could achieve their dream. It was a heavy advocate for decentralization. We need to structure ourselves as a DAO, we need to drop fox tokens for all of our users and open source everything, and work with the community to build a community-owned interface to these decentralized protocols. At the time, I was excited about this whole DAO movement. I think it's so freaking cool that you can have these community-owned products and ecosystems and not have to have a centralized corporation with a CEO.

[00:38:41] Citizen Cosmos: The last question is a traditional question. You are so alive, so energetic! What on Earth motivates you to keep on staying, apart from the decentralization and the value of the building? Is there something in your daily life that you could share?

[00:39:15] Willy: For five years now, I've been saying it's the best day ever, every single day, so I kind of became known for that somewhat, and I love it. I think it's the right attitude to have. I love my job and the people that I work with. I'm passionate about what we’re working on, and it's fun. My values are to always, first of all, work on something you love, work with people that you love and stick to your values, and have fun!

[00:40:00] Citizen Cosmos: I like the number 1 rule; this is my biggest value. Thank you so much. It’s been a huge pleasure!

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