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(It’s a machine-generated transcript, so please forgive all the mistakes)

Mac: Hello, Rohit. It’s very nice to e-meet you today. Could you introduce yourself to our listeners? Because you are a very experienced startup person because you’re in startups since 2010 as far as I know. So could you tell us a little bit about your background?

Rohit: Yeah. First of all, thanks for having me Maciej great to be here. So I come from an engineering background. I graduated from IIT Bombay in 2012, and basically, I have been a builder for almost all of my life since college.

So I started my first venture in 2010 when I was still in my second year of graduation. And basically, I was building Instacart for India. While I was building that, I quickly realized that this is a more operations, heavy business. I’m probably not that passionate about operations, but with that, I found out that I’m very passionate about consumers and tech.

Then I started like started exploring more things and eventually I found a second company, after my graduation, which was called PaxPlay. And it was a mobile game studio that I bootstrapped and scaled to 3 million users. And while it was at its peak, somewhere around January 2017, I landed on Bitcoin white paper. And I think like that’s the same time I was reading this book Sapiens as well. Like many people have heard of this and this just kind of connected the dots. And I got a profound understanding of Bitcoin.

Like not like I became the master of Bitcoin, but I realized that it is going to be very big. Basically crypto is going to change how humans coordinate and that’s the angle like I saw crypto at that point of time. As a result, I just very curiously started spending eight, nine hours a day, just reading about blockchain its applications, where it makes sense where it doesn’t make sense and all of that. And as a result by end of 2017, I started this company called Mudrex, with my friends from college.

And the idea was that it was pretty hard for the new users to get into crypto. So basically we just wanted to make it easy for the new users to invest in crypto because that’s how most people start their journey in crypto like they first invest into it and then they start understanding it, and then they basically go deeper into the crypto products. Then we have been backed by like a few of the best investors in the world, including Y Combinator, Nexus venture partners, village global, et cetera. And till I’ll we help helped roughly 40,000 people trade more than, $2 billion. And now I spend more of my time in the decentralized finance of things.

So we recently started another project called mesh finance, where basically mesh finance is a community of people who want to bring decentralized finance benefits to every human. And the first product we are building in that is like your better savings accounts or, or better chequing accounts basically. So that’s in short, like about me. I’m happy to go deeper into anything like you would like to.

Mac: Yeah. I’d like to follow up with these DeFi projects because I’m not the DeFi expert. Like I used a Uniswap, but that’s all my defy experience I’ve read about it. But like, to be honest, I sometimes feel a little bit worried about connecting my wallets to, some websites on the internet created by an anonymous person. And, because of that, I’d like to ask you, what’s the difference between Mudrex and Mesh finance, because as you say, Mudrex is more about investing, but Mesh finance as far as I understood, is like broader in scope. There is also about the account and saving money. Could you elaborate on that?

Rohit: Yeah. So let me first share the difference between CeFi and DeFi. So CeFi is centralized finance, where you basically depend on centralized entities. So for example, if you store your capital in a bank account today, it’s basically, you are trusting an institution with your money.

So whenever you want to move that money, essentially, you are asking your bank to move money on your behalf. So money is never with you. It’s with someone else. The harm of that could be multifold. Number one, since it’s a centralized structure, like let’s say if there’s a hacker since all kinds of money is digital today like we are not living in printed money anymore. So in case, a hacker gets access to like the website of your bank account, they can basically wipe out everything and all the users can lose money.

The second, harm it can do is like, when you are depositing your capital in a bank account, the banks actually lend that money to like others to make interest on top of it. It’s basically humans who are making those decisions.

And many times sometimes intentionally, sometimes unintentionally, like there might be bad loans. And because of that, you might end up losing money.  Those are like the side effects of using a centralized structure. In decentralized structure basically, you try to create the same systems where you do not need to depend on a few individuals or a few institutions to basically achieve the same results.

Now, what you want to do is you want to store your capital. And at the same time, you might want to lend your capital to someone. So decentralized finance is basically like, imagine it, like you are trusting a code and code doesn’t have greed. Code cannot behave in different ways in different situations, always behave in the same way. So you are now trusting the code instead of humans.

And as a result light, like you are moving away from like trusting the centralized entity or few institutions or individuals with your money. And with that, using that mechanism, like you can create multiple different applications, which can involve banking. It can involve payments, it can involve exchange, et cetera.

So that’s the broader definition between CeFi and DeFi. And you can say like, Bitcoin is the first decentralized finance application, which is basically money. Where money is not controlled by central governments or the central banks. It is in strict control by a code. So similarly, like Mudrex is a centralized platform where people are basically depositing their capital into Mudrex is basically helping them invest.

So essentially a user is at the end of the day, trusting Mudrex, if something goes wrong, like basically like users can lose money. While Mesh is completely decentralized, it’s basically a piece of code.

So you are never giving your money to someone like I can’t even touch anyone’s fund when somebody is depositing capital into Mesh finance. So that’s how mesh finance is decentralized because no human or institution can basically take away your money or do any action on behalf of you. It’s basically the same code, which always does the same action regardless of if the user is you or me or someone else.

Mac: yeah, that’s very clarifying because I was thinking about Mudrex, not in terms of the front, because like, if you say that it’s CeFi it sounds like a front, that you just give your money and they help you to invest.

Rohit: Yeah. So let me share a little bit about the product as well. So Mudrex, help users, invest, just like you have mutual funds or ETFs in the real world. Where let’s say you want to invest in the finance sector. So instead of picking up one single stock, you basically invest in a basket of stocks.

Similarly, Mudrex helps you invest in a basket of cryptocurrencies based on a team. That’s what Mudrex does, and Mesh is trying to build like a better savings account there. Now you might pull different kinds of assets, which could be like USDC, which could be Ethereum or Bitcoin. So Mesh helps you earn passive yields on top of it.

Mac: So the idea is that in CeFi world, the bank lends your money and the bank gets the profit, but in DeFi you lend your own money and you’ll get the profits from lending.

Rohit: Exactly.

Mac: Okay. Okay. So, okay. This sounds cool. But when you are about to get either CeFi or DeFi customers, they need to trust you with their money, which is a pretty challenging thing because, someone needs to say, okay, in Mudrex case They want to just escape one day and take all our money and in a mesh finance case okay. They need to trust the code that, there is no hidden bug or anything that will let you take out the money. So how do you acquire users for these financial products?

Rohit: Yeah. So in case of mesh finance, since majority of the risk actually lies on the code side. So we actively run bug bounties where we reward people like up to 25 to $50,000, if they find a bug and report it to us so that we can correct the bug as soon as possible. And second, we get the code audited by security farms, smart context, security farms. So mesh finance, smart contracts have been audited by farm called Kwan stamp, which has been in the space since 2017. Again, a Y Combinator back from,

In the case of Mudrex, since it’s a centralized platform, people do trust the Mudrex team, but at the same time, we follow all the protocols. Like we are only interacting with, let’s say tokens, which are good interpretations. We are only interacting with exchanges, which are like highly valued in terms of reputation for an example, Coinbase or Binance.

Mac: Okay. And how do you inform users about this? Because, when you say that you, do bug bounties, or you have a security audit, these are things that are easy to get for a technical person. If someone works in open-source if they understand bug bounties and so on. If someone is not technical, do you find this kind of user also using your servers and trusting you with their money? Or is it more challenging or maybe there’s any other way?

Rohit: Yeah. So for any DeFi product, it, it takes a little bit of time for users to basically get comfortable themselves with using MetaMask the wallets, et cetera. So there is an onboarding journey. There is a learning curve. So I will say anyone who is just coming to crypto, I don’t think they use any decentralized application. It takes a little bit of time to get comfortable with MetaMask. Once you get comfortable with MetaMask, the first problem which get resolved is like you get comfortable using the MetaMask with the user experience itself. The second problem gets solved of getting the trust is like since, DeFi is built on blockchains like Ethereum everything becomes transparent. So you can actually see how much capital is there into those smart contracts, how many people are using it. So all those data are like pretty much public.

To see that it doesn’t require a technical knowledge, when you have open-source code, it generally like happens that, many people look at that code. So basically you can trust, as a social structure that okay, many people have gone through this code. So having said that, I will say that new users who are just getting into it, they should not be interacting with newer protocols. People who are more familiar with it, like they should interact with, with the DeFi protocols. And having said all of that, all DeFi protocols is still has the smart contract risk it will be zero. It will be lesser if the protocol has been into existence for a longer period of time. So basically the risk, goes down as the time progress.

Mac: Okay. Yeah. that’s the thing that you mentioned that truly resonates with me that, when I got into crypto, I was like, oh my God, I have to install some extension to my browser and the first thing was, I needed to send the money to Binance. And it turns out they have an account in Carribean. And I was like, what the hell? Like where I’m sending my money, some, small islands with very little financial supervisory. So it was like very strange. I send it, I bought crypto, I send it to my MetaMask then I mint it in an NFT. And it was like, very hard to get comfortable with that. But now I feel like, okay, this is normal, just like, using my first, digital account, like a normal bank account is also very strange because I was thinking, okay, maybe I click a bad thing, and then all my money gets out and so on. So I think your point here that there’s just kind of learning curve and the more people spend time in this environment, the more they are open to other products.

Rohit: Exactly. Also, I think there is a sense like DeFi itself is pretty new. Like not more than two years old, there has to be a lot of work to be done, from the community side as well, in terms of creating, learning content, or like making people aware of like the use case, the different products, how to use them basically getting them comfortable with DeFi and using its products.

Mac: Yeah. And, even a compound, as far as I remember had this, bug that turned into multimillion-dollar losses that like this money went to some random person and they couldn’t find who this person was. And, it was a problem. And the Compound is one of like the poster boys of DeFi. So if it can happen to them, it can happen to anyone.

Rohit: So just, just one correction there. So the bug was not in the product contract of Compound. So let’s say if you lent money on Compound, you will not lose money at all. Like that’s not what happened. The bug was into their, contact of their token, contracts. Basically the com contract it was basically like somebody got access to that. It’s still a bug, but like user didn’t lose any money because of the.

Mac: That’s good to know that. Okay. And what’s the business model for your projects, like Mesh and Mudrex? What’s the offer, the first thing, and how do you plan to make money if you plan at all on these projects?

Rohit: Yeah. So on Mudrex it is, pretty similar to any asset management firm or a mutual fund.  Basically, we charge a management fee and a profit share fee kind of model. And that’s how Mudrex makes money, in the case of Mesh basically, it’s always written within the smart contract only. So let’s say you deposited a hundred dollars and because of the yield, you ended up making $110. So some part of the profit and some part of management fees goes into that treasury of Mesh finance community. And basically, the tragedy is again, managed by the same people who are users of mesh finance.

Mac: Okay. And who’s the average user of both of these services.

Rohit: Yeah. So for Mudrex, the average user is someone who is just trying to get into crypto because, like in 2017 there were like, people just wanted to invest in Bitcoin, and probably Ethereum that’s it. But today we have the whole asset class within crypto. So now people end up investing in coins, which they don’t have any idea about. So it’s basically for people who are trying to get into crypto, but they are getting, they want to get into crypto with the more sense of what they are actually investing in.

So Mudrex is basically for people who are just getting into crypto and they want to invest something, for the long-term and also on a team or on a thesis-driven model. Mesh finances as of today. It is for people who have invested in crypto. Now they have all these crypto assets, crypto tokens, like Ethereum It would be stable coins, that there is a town where the price is always backed by a dollar. So now, instead of, just keeping their assets idle, they can deposit it into Mesh Finance contracts and start earning yield.

Mac: I know that you have this significant startup experience that you mentioned before, founding this grocery company, founding this mobile games company, that’s turned pretty big. How these experiences impacted your web3 projects. Were they, a good thing, but maybe sometimes they were limiting?

Rohit: Yeah. So I think like, first it helped me having an understanding of web3. Like, if you are building things, you can know the challenge in the existing infrastructure. So for example, if, if there is any developer who develops games for Apple or Google Play like you depend on Apple and Google play for multiple things, including your games get approved. If you make any money like they are actually taking 30% of it, they can always close down your games at any point in time, you have to keep updating the game to stay relevant. So all these problems arise.

So web3 is basically a solution where I don’t have to go to any app store to ask for permission to publish my game. Whatever I make like it basically comes to me because like, I am writing the smart contract. And at the same time, like nobody can like take away my game once it is published, like it, it won’t go irrelevant or anything like that. Also like, it helps building better economics, like for any game, for any products, users are the biggest assets, which have been neglected in web 2.0, so far. Web 3.0 is giving us a chance in which we can actually value the users themselves. And that’s how basically it helped me understand and apply the same things with the newer product I am building.

Mac: Yeah. Like, that’s an interesting thing that you pointed out that for game creators, it’s very tangible, like, these problems with web2 are very tangible because they literally take 30% every time from your game and you can get banned or for some random reasons. You can do everything correct but someone clicks the wrong button in Facebook, in Google, or Apple headquarters, and you’re done. I know what a company in Poland that it’s like, a $20 million company. And they actually got wiped out almost because Facebook just deleted their access to API. And they’ve done it based on some random article that compared its company to Cambridge Analytica, which is totally not true. It took them a year to just, recover and be able to use the Facebook API once again. And the CEO of this company is a very well-connected guy. So if you are a random anonymous person, you have very little chance to succeed.

Rohit: Exactly.

Mac: Do you have any particular experiences in the web2 projects that helped you, like, for example, you’ve done something in this mobile gaming that like some, for example, user acquisition strategy or product ideas that helped you in other projects?

Rohit: So, in the case of mobile games, like I was using, basically Facebook for user acquisition and, I used to use memes as the way to acquire users. Eventually like memes are the way of crypto. So I think that has helped me a lot in understanding crypto and basically like spreading the message with the power of memes. So that is one place where the previous experience helped me a lot. The second is like in crypto, like you have to design, these tokenomics, you are trying to create an incentive design. So you can pretty much compare them as creating a gamification model. It’s basically similar to that. So that is, again, another thing like which I’m able to apply in web3 which I’ve learned while building games.

Mac: That’s interesting. Because one of the most fascinating books I’ve read about basically about crypto space, although it’s not about crypto space is a book about game design. And when I was thinking about, all these incentives, feedback loops, and so on, I was like this is about crypto basically. So, you can translate these skills to the new products.  As far as I understand you do a DeFi product with Mesh finance, but I wondering how decentralized you are because there are different levels of that.

Rohit: Yeah. So, if you think about decentralization, there are like multiple factors. So the first one is like, do I have any control, in terms of like, if I can control the funds of the users. So in that sense, I cannot. So no one can, in that sense, like mesh finance is already decentralized, but, for example, what should be the fees are those decisions are still made by the team. For example, like which products to make, or how to incentivize users, these decisions still depend on the team or like a small set of contributors. So slowly, slowly, we are trying to like the way mesh finance works is itself unique, so there is no team, from Mesh finance, basically Mesh finance is led by the community. It’s the contributors all across the globe.

So contributors help in terms of development, in terms of programming, in terms of, growth in terms of community, building research, et cetera. So slowly, slowly, we are building this community and we are giving them power. And as the community grows it becomes more and more decentralized. So, since we don’t have a token today, there is no governance involved in which users can directly vote for things like what should be the fees for example. But eventually, like we will become decentralized once it makes sense the product has achieved decent scale. We know the product is ready to be given in the hands of the community.

Mac: Okay. And do you reward the community with some other tokens?

Rohit: No so today there is no token, and that’s the philosophy behind Mesh Finance. Like tokens should be a way to incentivize contribution. And basically we are still in the development mode as of today.

Mac: Okay. And I’ve heard that you are, you said that you won’t hire anyone like you and your co-founder will run it just with the community is that true?

Rohit: Exactly, exactly. And like the first problem we are always thinking about is like, how do we remove ourselves as well from the question, how do we make it that centralized?

Mac: Okay. And how can you manage to do it? Like, what were the challenges with this kind of approach that you chose?

Rohit: Yeah. So I think like the first is like, you have to find believers because if you are not hiring someone that basically means you are not giving dollars to anyone. So anyone who is working for it, like they are working on it because they believe in it. And that incentive mechanism will happen via that token in the future. Like, not today, probably. So it takes time if you don’t have a token existing to actually bring in the true believers of something you want to build.

I think like in the early days, we were getting like one or two contributors in a week, or in like in a month, today like we are having like four or five contributors every week. And the quality of contributors also keeps rising. Now, other protocols are also reaching out to us to explore, like, how can we collaborate with them as well? Because like now we have built a very loyal, strong community, which can basically make a difference because if people are working on it, because they believe in it, like that creates a huge difference compared to if somebody is basically working for it for the dollars or for a salary.

Mac: Yeah. Actually, that’s one of the things that’s make me doubt early talking airdrops, because at the end of the day, when people do it for money, this a famous, I think it was research in Stanford that, they let kids draw for fun because they like drawing and then they’ve chosen to give them some rewards. And, after they were giving them rewards, these kids stopped just drawing for fun because they were expecting the rewards. So I was wondering, how to balance out this on one hand you want to give tokens because, people want to, also feel the skin in the game, but on the other hand, it may end up making people less motivated to contribute, which is absurd.

Rohit: I think like in generally the whole web 3 space is still learning. Like we will see more and more innovation on the token economic side of things. So like the first phase of the five protocols, they were all led by teams, which were backed by VCs at the end of the day. So there was no, such, a vision of contributors or like open source development as such. And most of these protocols basically rewarded the early users, which basically makes sense. If you are trying to create a network, the first users who are coming to the network, they are adding much more value. They are taking much more risk than the thousandth user basically. And that’s why it makes sense to reward the early users and keep decreasing the reward as more people join in.

Now, we are entering into a phase where protocols are building without basically getting funds from VCs. They are trying to build from the community approach from the bottom-up approach. So now we will see more and more tokens start going towards the contributors. It will still keep going to the users where people will figure out, like, how do I find out my users who are loyal, like who are not just coming for a week on airdrop and just like leaving the next day.  Like, these kinds of things are happening and we are already seeing some of the protocols. So the best thing about, DeFi is, since everything is public, that data you have, like, it has magic in it. Like you can basically analyze every address and figure out if this address is worthy of our tokens. If this address is actually a loyal user to our product, and that’s how like many protocols are going to approach about airdrops in the future,

Mac: It’s actually very intriguing because you could just, track users. I mean, like, their addresses from multiple products and see, okay, this is the kind of user that actually uses the products. So maybe we can reward him just in a position to, okay, this is the freerider the guy that just comes for the airdrops, but doesn’t use it at all. So you, as a founder, as someone leading the product, you can actually like, be very selective about the users. Like the, because users are not that anonymous. Like they can be anonymous in this terms that you don’t see their name, but you see their history on the blockchain. That’s intriguing. I kinda thought about that. Okay. So I got the last product question because I know that you’ve been in YC and YC is famous for their crypto projects, like Coinbase or file coin. And I want to rink how they, how this experience helped you in crypto. Can you feel this, experience that they got from other projects, or is it, different that they help maybe on different levels?

Rohit: Yeah. So I think YC helped me personally, in terms of, communication a lot, like the partners help you communicate much effectively. Probably like this podcast is also a reflection of that. So that, that’s one thing where the internal YC team has been helpful. But I think the biggest asset YC has is its community like its community of 10,000 founders probably today. So you can basically reach out to anyone. If you are stuck on a problem, like, let’s say you want to solve some specific problem, you can basically bet that at least 5, 10 founders have already gone through that problem. So you can reach out to the community and the community really helps. So I think that’s the biggest asset and that’s where, like, we have got the biggest benefit from YC as well. .

Mac: Okay. And are there many crypto startups in YC?

Rohit: Yeah. So I think YC funded a lot of startups in the 2012 to 2014 era, which is where Coinbase file coin. Some of these companies came in, during our batch. So I was in the 2019 batch and crypto was literally at the bottom cycle. So there were not a lot of crypto companies. There were only two crypto companies in our batch. And now, again, I think YC is backing a lot of crypto companies. So these new batches I’m seeing like 10,15 companies are building on crypto.

Mac: Okay, cool. Okay. So we go through the free, other questions, not related to your project, but more to your experiences. Like what was the most mind-blowing web3 projects that you’ve seen so far

Rohit: Uniswap I think by far that’s the one I have been in love with, because that is one protocol where you do not need any single human like everything is basically done by the code. So that, that has been the magic for me.

Mac: Yeah. For me too. Like when I learned that it’s just a smart contract on Ethereum and I was like, what this is just a piece of code and it does all this stuff. And it’s pretty magical.

Rohit: Basically, I think the first version of Uniswap was just a hundred lines of code and it’s basically replacing Wall Street. It’s basically replacing New York stock exchange. So you can imagine like how big an impact is that.

Mac: Yeah. And what was the most fun thing that happened during your project development? Something that’s made you laugh?

Rohit: So I think like community, like, so we have contributor calls every other Friday, and I, like, I just have fun in those, like, because we get people from different side of countries. And recently, like Africa has been one of the most active country in our community. And like, I just love those people. Like, those are the most fun people to work with to talk with. Like, they just have high energy and like just being like fan of them.

Mac: Okay, so Rohit, last question. Who do you think I should speak with next? Like, is there any person that you think would be a good fit for this kind of conversation?

Rohit: Yeah. So I think you should talk to a good friend of mine, , he’s building this project called bip.so which is basically a place where, people can contribute to community-driven projects or basically a notion, but for Dows but decentralized.

Mac: Yeah. That’s sounds interesting because I hear from many Dow contributors that it’s a pretty hectic environment.

Rohit: Exactly.

Mac Okay. Okay. Thanks a lot then. And I will definitely follow up and ask you for some introduction,

Rohit: It sounds good Maciej it was a pleasure being here with you.

Mac: Yeah. Thanks a lot. And have a good day.

Rohit: You too.