Entering the Maitrix by Building an Economic Infrastructure for Decentralized AI, with Ian Estrada @ MAITRIX (Audio)

[00:00:02] Hello everybody and welcome to the Crypto Hipster Podcast. This is your host, Jamil Hasan, the Crypto Hipster, where I interview founders, entrepreneurs, executives, thought leaders, amazing people all across the world of crypto and blockchain. And today I have another amazing guest. He is joining us from the matrix. His name is Ian Estrada. I didn't ask him his title. I should have maybe founder, CEO. He'll let us know. So, Ian, welcome to the show.

[00:00:33] Hey Jamil, thanks for having me on here. And yes, I am the co-founder and CEO of The Matrix. And yes, I am from The Matrix, but physically, you know, I enter The Matrix between Shanghai and Manila. Right? So super happy, super happy to be here. Awesome. Happy to have you. Thank you for joining me. So let's kick things off. I'll ask you first, you know, what is your background? And is it a logical background for what you're doing now?

[00:01:03] Right. So I guess, well, I'll answer the second question first and then maybe I'll answer it backward. I don't know because there's so many backgrounds that don't really make sense and then they end up, you know, hitting it, maybe being very successful with the protocols that they build. But to answer the question, my background has been primarily in financial services. And prior to crypto, I built a lot of things for like mass consumer.

[00:01:33] So in the Philippines, I was the youngest vice president at GCash. So that's the nation's number one wallet with around like 100 million users. My largest product there was has around 60 to 70 million users right now. When I was there, I basically was working on credit scoring. So automated credit scoring payment networks, because you had to kind of disperse the things like that.

[00:01:58] And a lot of other kind of adjacent adjacent products that I had to build. So that's what I did. After that, I also was the head of product of the largest consumer lender in the Philippines by portfolio. And then I did like a short CVC stint where I set up the CVC of like the second or third largest conglomerate in the country.

[00:02:22] So basically, I've come from, I guess I would say I would come from a Web2 background. So product management, the technology background on the Web2 side, focusing on financial services. And then I basically, you know, ended up here. I started, got into crypto end of 2020. And it was probably a big part of it was I was on sabbatical for that year.

[00:02:50] Finally took a long break, trying to figure out what I wanted to do next. And it was a pandemic. And I started to get curious because I think that on the Web2 side, especially if you're in finance back then, you actually look down on a lot of these crypto folks, right? Bitcoin, like what the heck is that? You know, it's not real money. And I certainly was part of that demographic.

[00:03:14] But I started looking into it and basically was able to get connected to interesting people in the space. And I think the first iteration of what I'm doing now was basically a really fast on-ramp and off-ramp. And I saw that there was an opportunity back then with Axie Infinity and Play2Earn in 2021, where it was super booming.

[00:03:36] And I was seeing that, OK, in a lot of Asian countries, people would have to pay like 20% to 30% of fees to actually kind of off-ramp their earnings, right? And what I did was in less than a month, I basically built a product that actually allowed people to off-ramp with like less than 1% of any amount. If you remember back then, gas fees were super high.

[00:04:05] Regardless if you were actually off-ramping $50 or $200, you'd have to pay like 20 bucks, right? And if you're in Asia, you know, it's micropayments. But I was able to bring it down to like 1% to 2%. And the actual time to get your cash into your bank account or mobile wallet was like less than a minute, right? So basically, I was able to build that and expand that into around six countries in less than three months.

[00:04:34] And then, you know, obviously kind of the bear market happened and we started kind of finding our way. I started, we started, went on this path on the matrix because of really, we got really super curious about, I personally got super curious about AI and meme coins. I was also able to meet with the CEO of Aether. So, you know, one of the category leaders of the centralized compute industry.

[00:05:01] And we were kind of throwing stuff around and the idea that stuck, and I think that we were all like myself and the team were super interested in, was a concept of like AI stable coins. And it also obviously resonated with Aether. And we basically created the first AI stable coin or intelligence stable coin with backed by ATH. And we're basically, and now we're basically building out that ecosystem. Got it. Yeah, it's logical. Also exciting.

[00:05:32] You think so? Yeah, yeah. I forgot about, you know, all the, all the Philippine Axie Infinity millionaires. So, you know, cool. So the matrix, right? Why do I think of the matrix? I think of the, yeah, I think of the Keanu Reeves movie, right? You know, but. That's the point. Yeah, that is the point. Yeah. What is matrix all about? And how are you building a decentralized economic infrastructure for decentralized AI?

[00:06:02] Right. So, yeah. Yeah. The matrix is basically the way that we actually, we think about it is that it's a place where you can mint, deposit your AI tokens and mint these, what we call intelligent stable coins or as a shortcut AI, AI USDs.

[00:06:24] And basically what we're actually trying to build out is a protocol where anyone with holdings of any AI tokens, right? Any AI tokens can actually use those tokens and make money or play with DeFi with them. Right. So I would say that the closest analog to what we're doing with the matrix would be MakerDAO. So if you remember, it's basically like a collateralized debt position to, you know, for Ethereum and then for DAI. And we're actually doing the same.

[00:06:54] We're doing the same for AI tokens. And I think the biggest question is like, is why choose AI tokens? They're obviously very volatile. They're also, I mean, and, you know, X, Y, and Z, they're fairly launched. They're not VC backed, blah, blah, blah. So I think that there's a huge opportunity here.

[00:07:14] I feel very strongly that, you know, these AI, I think a big part of the AI token meta has been allowing founders, like AI founders working on AI agents and other projects to be able to raise money fairly quickly. But I think the problem that happens when they've raised it fairly quickly is that, you know, there's no actual utility for their AI token. Right.

[00:07:42] And these people are focused on what they're doing from an AI perspective. No way are they going to be thinking about tokenomics. No way are they going to be thinking about like, how are we going to prevent selling pressure? Right. Right. So what we actually do is we actually help out both the project side and the user side, because now for you to be able to mint your AI USD, you have to lock your tokens with us. So obviously there's going to be like different collateralization levels. Right.

[00:08:12] So for these types of tokens, it's definitely going to be above the standard 200%. But at least now when a, let's say a foundation or a DAO building an AI project and for those with fairly launched tokens, they usually have like less than 10% of total supply. And if you've, I'm sure a lot of people here listening in would have invested in meme coins. And everyone watches the dev wallet like a hawk, right?

[00:08:40] Especially the top tier ones. And if they see them sell, that's very much fun. Right. So imagine using the matrix instead. Right. I have a treasury. I don't have to let it go, but I can mint stable coin and actually use that to pay for employees for costs and things like that. Right. So, so that's one on the older side. Right. So I think that if you're, you, you know, I think one is that you're obviously exposed to a lot of volatility risk.

[00:09:08] And basically what, if you want to support a project and you don't want to, you know, take, and obviously you want to make sure that you keep the token, right? Token long term. But then you're actually like, okay, the cost benefit analysis doesn't make sense. Why shouldn't I sell it? Like, I don't want to sell it, but maybe I should sell it to get into this opportunity. With us, you actually don't have to. You basically mint your AUSD. Go to our platform. You can provide liquidity and liquidity on our side.

[00:09:35] You can stake it for rewards and a lot of different things. Right. So instead of like, we're actually creating an economic layer for, you know, the, the, for, for the, you know, emerging decentralized AI industry. So basically that's pretty much it. Yeah. Sounds exciting to me. What does, you know, I should get into stable coins first. I didn't know that all the, I didn't know that people watched the dev, the dev wallet movement.

[00:10:05] If you're investing in meme coins. I didn't know they looked at that first. We do. We do. Because it's an indicator for, for rugging. I certainly do. Right. When I was still in the quote unquote trenches. Right. Because it's, it's basically a good rug indicator. Right. Right. So it also is, it also depends on when the, the timing of the cells are. Right. So if basically they didn't sell in the first, you know, 24 hours or first few days, it means that it's probably a real project. And the dev is actually cooking something. Right.

[00:10:34] So you have to, you know, people, people watch it and people are very emotional because sometimes the dev wallet is probably part of the top five wallets and anyone selling in the top five can potentially influence the price in a big way. Right. So that's why people get angry. That makes a lot of sense, actually. Like a lot of sense. So thank you. I did not know that.

[00:10:57] So I want to talk about intelligent stable coins, you know, what are they and what are the benefits of them? Right. So intelligent stable coins are basically stable coins that are backed by AI native tokens. So it can be venture backed similar to guys like Aether virtual.

[00:11:22] So these are projects that have launched AI tokens and the foundation pretty much manages the entire token supply. And or either fairly launched tokens where it was launched in a launch pad and it's basically kind of the community pretty much owns the supply. So what these intelligence stable coins are, what we call AIUSDs. Their purpose is actually multiple things.

[00:11:50] The first one is I already mentioned was it's basically allowing people to use AI tokens in DeFi. Right. So that's the first one. And then the second one where and it depends basically on how what the project wants to do with it is basically it's their way of, you know, settling within their ecosystem. You know, instead of paying people with their volatile native token, they can use the stable coins. Right. Stable coins there.

[00:12:18] I would not say I actually would not say that I don't think anyone who looks into our project or is interested and looks into it should not think of our AIUSDs as like US as similar to a stable coin, similar to USDC or USDT. Right. Because pretty much the USDC and USDT is basically like, you know, crypto dollar. It's basically worth a dollar. Ours is actually not like that.

[00:12:48] It's actually an asset that you can actually that you can use, the liquid asset that you can use backed by your native tokens. And you can actually use it for DeFi, right? Multiple things. Right. So we're just basically wrapping, you know, that token, that AI token that you have into a stable coin, which is actually easier, which removes a lot of the volatility. Right. And makes it easier for, you know, for it to be used in DeFi. Yeah.

[00:13:15] AI is taking off and AI agents taking off. And the use of AI in DeFi is becoming increasingly prevalent. Right. I said, I said earlier that I'm excited. I'm also concerned. And I want to see that. I want to find a difference. When I hear you speak about you, what you're building, I think back to Terra Luna in 2022. And, you know, how, how are you different?

[00:13:41] How do you prevent the potential to negative impact of losing your pay? Like, if you get, you know, if you grow enough, the hedge funds in Chicago are going to be looking on the lookout for you. So how do we prevent the crash again from your AI USD coin and matrix? Right, right, right. I think, I think the first point is that we're not going to be committing 20% APY per annum, right? Which is what Anchor Protocol did.

[00:14:09] I think a big part of it was people got scared of what would happen because the Luna Foundation was actually paying for that 20% yield per annum out of their pockets. Because, you know, the revenue protocol revenue wasn't enough to cover that 20% APY. So it had to go. People were just like, okay, it's the treasury is running out. What do we do? Right. What do we do?

[00:14:32] So, you know, people were scared and when people scared, people sell and, you know, it's basically a vicious cycle. So I think that's the one thing that if I will comment on what should not be done, you never do that because that's not how economics work, right? Nothing grows 20% in perpetuity. There are corrections, peaks and troughs. I think so that one from a macro perspective, that's definitely, you know, we're not going to do.

[00:14:57] The second one is we will be employing different types of stabilization mechanisms or pegging mechanisms across different types of projects. One of ours, one that we'll be using is actually what we call mint and burn equilibrium, which is similar to the Terra Luna model, but we're putting our own spin to it in multiple ways.

[00:15:22] So first one is basically when we launch it, when we fully launch this, there's basically an algorithm or some sort of formula that computes how much supply should be minted or burned at any point in time. That's one.

[00:15:37] Obviously, we're also making sure that, you know, reserve ratios, we're applying some of kind of the web to like risk management stuff there as well and baking it into the product, as well as making sure that we have, you know, reward mechanisms to make sure that the peg is maintained. The other one for volatile tokens, which is like the, you know, fairly launched tokens or like similar to meme coins. It has to be a collateralized debt position because that one has actually worked.

[00:16:05] For example, MakerDAO has weathered many, many cycles, many, many, many, many, many cycles. And it's really, you really have to have, you know, higher over collateralization. And basically, and yeah, I think that's, that's, that's one of the, that's pretty much having to what we're going to be doing. So I think that there's always a risk. I think at the end of the day, there is, you know, always a risk of something deep pegging. There's always a financial risk, right?

[00:16:33] Like, you know, it's called the black swan, right? So you never know when it's going to happen, but we will have safeguards in place. And we will, and I think that's a topic on its own. And I think probably in the next two or three months, that will be once our project starts taking off. That's probably going to be one of the big things that I'm going to have to expand, expound on the community. So yeah, please stay tuned. Yeah, I have a follow-up there and maybe you have, might have an idea or not.

[00:17:03] I see, I see meme coins as different tiers of risk. You know, like Trump coin to me is a little less risky than jail, than jail stool or the Hotua coin that came out, right? Are you going to have different ways to assess the collateralized debt positions for the different types of meme coins? Like that, I think that's probably where your, where your DJ, you know, meme coin background comes in handy, right?

[00:17:30] How do you assess the different layers of risk and how do you deal with them so that you don't lose your peg? Right, right, right. Okay, so, so there are basically two approaches that we create AI Sablecoins. One is basically a strategic partnership where we actually create and manage on behalf of the partner, for example, like Aether, their stable coin. And then the other one, and the other one is, is actually a launchpad. So actually the interesting thing is for non like top tier projects.

[00:18:00] So maybe like if we're talking about like the first top five, if we're looking at like the top five AI agents category, we will likely be the one creating and managing those stable coins and, you know, we will do some custom stuff for them. But for anyone who still have, you know, is still growing AI project and things like that, but wants to make sure that create like define mechanisms for their token, it's going to be launchpad style. Right. So, I mean, on our side, basically we will be able to, we will help them.

[00:18:31] It's a lot, it's basically a configuration platform. So it's similar to like a pump fund, but there are obviously more questions and settings that you have to, you know, you have to, you'll have to do. And of course, like we will, our team will be pretty much providing research studies and things like that to make sure that any AI founder or project who wants to launch their own AI stable coin actually does best practices and actually kind of seriously thinks about how to design it.

[00:18:58] And the good thing also as well is that the fees earned for these stable coins, actually for those people who create their own stable coin, launch it on this launchpad, they actually own it. So whoever created it, actually the fees, the interest fees from that CDP actually goes to that project. Right. So that's also a big help. We only take a certain cut for that, but basically they own it.

[00:19:26] So, yeah, that's how we basically work with the different ones. Basically, we're, you know, it's different approaches to different risk profiles for sure. So you mentioned, mentioned pump fund. There are people in the industry who think that pump fund has been a black mark on the industry. So, but they can't be a complete a hundred percent, you know, dark mark on the industry. They have to have some positive attributes that you have learned from. Right. Right.

[00:19:55] What lessons have you learned from watching how they've done business that you were applying to yours? Okay. I think there were, I think it was, yeah, it was very interesting because I actually, you know, was deep into meme coins. Was actually deep into, yeah, very in meme coins.

[00:20:17] So here's basically my kind of degenerate philosophical position on crypto. At the end of the day, people are in crypto to actually make money. You know, the technology is great. Right. The technology is great. And I love the technology. But if you think about it, right, the top projects that are surviving, that are alive. Actually, you could ask a question.

[00:20:44] Is it because, are they alive because the technology is great? Or is it because their token price is great? You know what I mean? So, so if you, you know, so with that being in mind, I think a lot of, I think, especially at the start of the meme, you know, meme tokens, people were making money. It exploded alongside the, you know, Bitcoin hitting, you know, all-time highs from 80 to 90, basically just sent the, you know, market, made the market euphoric. Right.

[00:21:12] And I think a lot of people did, like the early ones made a lot of money because it was the Wild West. Usually, I mean, personally for me, what I would do is if you're familiar with, you know, how meme tokens are launched, I usually would just spend like 0.1 soul every, what's this called? Every six hours into like, you know, 10 projects, 10 projects that haven't bonded yet. And then usually I would probably win one or two things like that. And so basically it was a casino.

[00:21:42] Right. So I think that a lot of people got interested in it and a lot of people got kind of money for it because, again, price drives interest. Right. But what happened was I think that since there were people, you could easily make money from meme coins pretty early on.

[00:22:03] You know, bad actors, obviously the ones who really study about, you know, these things and whatnot, actually got, they probably turned their one soul into like 10,000 or 100,000 soul. And they now had dry powder to actually manipulate prices. Right. Because obviously, if you have market caps at, you know, 1 million, 10 million, you know, 20 million, it's still easy to actually manipulate that. And if I have a few couple of, you know, a few couple million dollars, I can pump the price to maybe 100 million.

[00:22:32] And then when it's 100 million, I just dump it. Right. And then basically it kind of repeats. So I think it culminated towards the Libra thing. I think it was kind of if you're crypto native, I think it's kind of an open secret that, you know, a lot of these meme tokens that are being launched are pretty much cabal and stuff like that. Right. And I think the dissolution, you know, the dissolution, people were basically dissolution with the, you know, Libra thing and the Trump token, Trump coin happening. So, yeah, I think positives and negatives.

[00:23:02] I think a lot of people just got super curious, started getting into it, learned about how to do wallets, made a bit of money. And then because they made some money, they became greedy and started getting, you know, perfect targets for, you know, ROGs. And, you know, also maybe some of them got demolished because of the different, the multiple liquidations that we've been seeing for the past few months. So, yeah. Interesting.

[00:23:30] Maybe the next one we will and things will take off, you know. And one of the things I think that you're bringing to the market are, you know, is your product. You're also bringing something called red pills. If I look at what I'm saying. Right. So I want to find out. Yeah. Red pills. Right. Red pill versus the blue pill, you know. So, yeah. So our red pill service is basically our points and loyalty system because we are ourselves pre-TGE.

[00:23:58] And we're live on Tested right now when we launch on Mainnet. So basically, the more you interact with our platform, it actually, these red pills give you access to our token when it launches. And I think, and basically a lot of this, I think you have, it's very important for people to accumulate now because there's a bonus. Right now it's like 4.4x earning. It's going to go down moving forward. But this is basically how to reward, right? How to reward.

[00:24:28] And it's also our means to actually test some of our token mechanisms before we actually launch it out in the market. So I think that if you haven't earned or haven't started earning red pills, make sure you go to our website and then get some, admit your first AUSD and then stake it. Right. And begin to earn your pills. Yeah. Awesome. So the loyalty reward points.

[00:24:58] They give people access to your platform. Awesome. So, very cool. So I want to ask you, we have, you know, DeFi is not fully, what's the word, like embraced by everybody yet. So I want to find out what the challenges remaining are in the DeFi sector and what we need to look out for in the next couple of years. Right.

[00:25:25] I think one would be user experience because it's pretty intimidating. It's pretty intimidating to go deeper into DeFi. And a lot of these products who are building DeFi stuff, right? Like a part of it is actually they're posturing towards like investors and perhaps whales. So they try to kind of overcomplicate their products, right? They do basically, we're creating a novel thing.

[00:25:51] But if you're kind of crypto native, you can basically kind of weed through the, you know, the junk and the fluff. A lot of protocols are actually pretty clever and super well designed. So I'll give you an example. So Curve is actually something that we're also taking inspiration from. And it's like from the user interface, it's one of the most like intimidating user interfaces to play in.

[00:26:19] So imagine if you remember Windows 3.1 or 3.11 or DOS, imagine that's the combination. That's the look, right? That look that they basically wanted to pursue. But when you really try to understand the protocol, the design is very elegant. It's actually very elegant. It makes you actually, and it's very, and it's actually something that would make you want to participate in. So I think that's one.

[00:26:48] I guess not really necessarily user experience because my precision there is that I think that DeFi should still have a certain skill level to use or else you might lose your money, right? So it basically weeds the, you know, people, it's a skill check. I want people still to have a skill check. But I think making sure that, like, you know, these mechanisms are actually, or the customer experience is much more straightforward. So that's one.

[00:27:15] I think there's also interesting things being built around, you know, liquidity management, like super interesting and across the different types of chains. I mean, restaking was basically one of the biggest narratives like early last year. And I think it's still, people are still building that out. So, and I think that DeFi right now as a narrative is not as strong as the AI narrative, right?

[00:27:42] But I think that it's definitely something that will be built out over time, right? As all of the different sectors increase in economic value, the more money people make here on the crypto side, the more that they will actually want to figure out how to, you know, maximize yield or put their money to work. So, it will be a natural kind of, it will be naturally go back to focusing on DeFi innovations. Yeah.

[00:28:12] I forget who said this, but somebody, it was either Munger or what's that, the Buffett or somebody said, I like my finance boring. You know, so DeFi should be boring, but AI shouldn't be boring, right?

[00:28:30] So, you know, from a boringness perspective, it seems though, you know, that a lot of people chase impatiently in this industry still, right? How do we get them to be patient? Because it's going to take some time for all these, you know, innovations to really, you know, form and gel.

[00:28:51] So, what is your best, you know, advice for them to stay patient, you know, instead of just jumping every shiny new object? That's a very hard thing to do because, okay. So, like I mentioned, I built mass consumer products, right?

[00:29:13] And for you to be able to build, get to a certain scale, you need to be able to build the product towards the lowest common denominator, right? As simple as possible, even, you know, people who, let's say, who have very little experience with, you know, digital apps or whatever should be able to use it. So, you have to do that.

[00:29:34] But the thing is, you know, crypto at its, right now, at its current state, since, you know, a lot of the stuff on the chain is being built and things like that, a lot of foundational still things are still being built. Again, I really believe we are early. You really can't do that because there's so many constraints, right? When it comes to building these things. I mean, the trade-off basically is, okay, you're unregulated.

[00:29:59] I mean, at least at this point in time, I doubt that, you know, central banks can regulate this completely, though. But, so you're unregulated, but there's obviously a learning curve. And at least right now, I really feel like it's a product market fit thing. I think that people who are curious and want to understand this or want to participate, they're the ones who are going to do here, right?

[00:30:21] So, and until, for example, we hit the point where the technology, like Web3 and blockchain technology can actually compete with Web2 apps, then it's basically like a self-selecting thing. So, you know, I don't have an answer to that. But, so I think for me, my belief is that it's like a self-selection. It's either this person has the mindset for it or it's not. And I think it is what it is.

[00:30:51] Like I would enforce, you know, non-crypto people who may not be interested in it to actually participate. Yeah. They will someday because it's going to be adopted globally, you know? So, so, so very cool. So I want to thank you very much for coming on the show today and speaking with me. I enjoyed our conversation. I have one last question. It's how can people find out more information about you, about the matrix? How can they do that? Sure. Yeah.

[00:31:19] Please go to our Twitter account. It's basically, it's x.com slash The Matrix AI. And by the way, the spelling is M-A-I-T-R-I-X, right? So there's an extra I in the matrix. And to, to get more news. Definitely also check out our docs, docs at thematrix.ai. And feel free to ping the team, join our telegram.

[00:31:48] We're very responsive there to, to, to any questions. And hopefully you, you, you follow us as we, you know, tell the story of what we're building. And I think what we're really building is going to be very foundational to the AI industry. With anyone interested in AI, anyone holding AI assets, we are going to make, you know, this is going to be big. So I hope everyone enters the matrix. Awesome. Thank you very much for your time today. Yeah. Thank you, Jamil. Super happy to be here.