Tensor - Solana's NFT Marketplace | Ilja & Richard Wu

In today’s episode, David is joined by Co-Founder and CEO of Tensor, Ilja Moisejevs and CTO of Tensor, Richard Wu. The three cover: How the different properties and foundation of Solana impact the product decisions that Richard and Ilja have made at Tensor? What are the first things that someone would notice that's different about Tensor, versus the NFT marketplaces on Ethereum? How did the $JITO airdrop impact the Tensor ecosystem? What about the Tensorians, the native PFP NFT of Tensor…who rocks a tensorian, and why? And of course, we had to ask Richard and Ilja whether or not Tensor will be joining in on the Solana airdrop fun…you won’t believe the answer. ----- 🏹 USE PODCAST24 FOR 10% OFF https://bankless.cc/Citizen2024 ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE ⁠https://k.xyz/bankless-pod-q2 https://feeds.flightcast.com/%E2%81%A0https:/k.xyz/bankless-pod-q2 ⁠ 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum https://feeds.flightcast.com/%E2%81%A0https:/bankless.cc/Arbitrum 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/Toku ------ TIMESTAMPS 0:00 Intro 3:55 Tensor Co-Founder Intros 7:15 Idea For Tensor 9:30 Learning Solana 12:32 How Solana Guided Tensor 16:49 Tensor NFT Marketplace 21:06 North Star of Tensor 29:00 Network Effects 33:40 Next Tensor Features 35:05 $JITO Airdrop 38:15 Tensorians 46:20 Solana 2024 49:38 Tensor Airdrop? 50:12 Resources, Closing & Disclaimers ------ RESOURCES Ilja Moisejevs https://twitter.com/_ilmoi Richard Wu https://twitter.com/0xrwu Tensor https://twitter.com/tensor_hq ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02David Hoffman?

  Welcome to Bankless, where we explore the frontier of the NFT ecosystem on Solana. That's right, it's a Solana episode today on the show. We're having the two co-founders of Tensor, the leading NFT marketplace on Solana. Banklessation, I'm sure you're all familiar with NFT marketplaces, but what about being on Solana makes it different? How do the different properties and foundation that Solana offers impacts the product decisions that Richard and Ilya have made at Tensor? What are the first things that someone would notice is different about Tensor versus the NFT marketplaces on Ethereum? How did the GTO airdrop impact the Tensor ecosystem? And what about the Tensorians, the native NFT PFP of Tensor, who rocks a Tensorian and why?

• 0:45David Hoffman?

  And of course, towards the end, I asked Richard and Ilya about whether or not Tensor will be joining in on the Solana airdrop fun. I enjoy talking to some of the dev teams on Solana, asking them about why Solana? What about Solana nerds knife them? Many of these dev teams I talked to all dabbled with Ethereum and then eventually moved over to Solana and stuck with it. Why? Questions like these, I'm always curious about as to why people end up in the ecosystems that they end up in in crypto. So let's go ahead and get right into the conversation with Ilya and Richard from Tensor. But first, a moment to talk about these fantastic sponsors that make this show possible, especially Kraken. Whether you end up on Ethereum, or Solana, or any other ecosystem, get there with Kraken because Kraken can drop you off wherever you need to go. If you do not have an account with Kraken, consider clicking the links in the show notes below to getting started with Kraken today.

• 1:30David Hoffman?

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• 2:16David Hoffman?

  Not investment advice. Crypto trading involves risk of loss. Cryptocurrency services are provided to US and US territory customers by Hayward Ventures. PVI doing business as Kraken. Are you launching a token? Is it already live? How are you managing the legal and tax for providing token awards for your team? Toku simplifies everything about managing token grant compensation, and you can get started with them for free. You'll have access to top notch legal and tax support to handle the distribution and management of tokens for your team. Toku caters to every step in the process, from user friendly legal templates for granting tokens to tracking vesting periods and calculating withholding taxes. Toku understands every grant structure, token purchase agreements, restricted token awards, restricted token units, token options, and all the other ones. Toku is already simplifying this today

• 2:58David Hoffman?

  for leading companies like Protocol Labs, DYDX Foundation, Mina Foundation, and many more. You can learn more about how Toku can help you streamline your token management and get started for free. Visit toku at toku.com slash bankless or click the link in the description below. Bankless Nation, I'm excited to introduce you to Ilya, the co-founder and CEO of Tensor. Ilya, welcome to Bankless.

• 3:18Speaker 01

  Hey, guys. How's it going? Good to be here.

• 3:21David Hoffman?

  And joined with us as well, Richard, the CTO of Tensor. Richard, welcome to the show.

• 3:26Speaker 02

  Thanks for having us.

• 3:27David Hoffman?

  So this is going to be one of these shows that I don't think a lot of Bankless listeners, we understand what an NFT marketplace is. Many of them will have already used an NFT marketplace. It'll be like OpenSea or Blur, but this is going to be a little bit different because this is on Solana. And so, of course, we're going to walk through what Tensor is. And I think we can also learn a thing or two about what it's like with the NFT ecosystem, what NFT marketplaces are like inside of a different world, a different universe, that universe being Solana, of course. But first, before we get into that, maybe just a round of introductions about you two. Who are you guys? Where'd you guys come from? What was your crypto journey? Kind of just like illuminate your background for us. Ilya, why don't you go first?

• 4:09Speaker 01

  Sure, yeah. So I guess I got into crypto first in 2016, 2017. Lost a bunch of money, didn't stick around.

• 4:18David Hoffman?

  As one does.

• 4:19Speaker 01

  Unlike you guys. Yeah, as one does, exactly. For whatever it's worth, I lost a bunch of money, but I didn't sell. And I held it all the way through the next bull market. Um, yeah, so and then kinda in 2019, like when COVID hit, um, I had to like move back home and crypto was like the perfect industry to explore from your bedroom. Cause it's like a world of opportunity, a keyboard away. And so I got like really into it, started hacking Ethereum at first, built a couple smart contracts. And then I discovered Solana and I guess like what I, what basically made me fall in love with Solana was just the UX. It was like so smooth and so easy to use. And also like the developer inside of me was like, ah, this is a cool opportunity to learn Rust. So I was just gonna jump at it.

• 5:04Speaker 01

  Um, and so I started hacking in Solana for like a year or so, um, then decided to like actually build some more complicated products, like maybe try a startup. Started looking for a co-founder and that's when I met Richard online as well, COVID times.

• 5:20David Hoffman?

  I am very familiar with uh, meeting co-founders online during, during COVID times. Uh, Richard, uh, why don't you also kind of illuminate your background for us?

• 5:28Speaker 02

  Yeah, so I sort of came from actually a TradFi background. So back in like, right before COVID, started a full-time job at a quantitative trading firm. As a AI quant researcher. And so I was like very much doing like quant research in the TradFi setting where I would be predicting stock returns, creating models around it. Backtesting them and hopefully deploying them and making, making some money for the firm. Um, what was interesting at the time was that obviously COVID happened. All the asset prices just started like skyrocketing, like tech stocks, equity in general, uh, crypto, of course, just right after the initial like dip, just like went to the moon. And a lot of my colleagues, a lot of my trader friends actually started talking about crypto a lot, specifically about Solana.

• 6:14Speaker 02

  I think what was appealing at the time was that, at least when I got into crypto, like way back in 2017 and I was just like trading Ethereum on Coinbase. Um, the common impression of crypto was that it was a very slow database that happens to be permissionless. And it wasn't like very interesting to, at least to me, because I felt that in web two, things were built for scale, whereas it seems like on Ethereum, it wasn't quite there yet. And so when I heard about Solana in 2020 from my trader friends, they all mentioned how it was positioned as the NASDAQ, the NASDAQ of the world, where it's permissionless, you can trade in sub 400 millisecond transactions. And that's what sort of got me excited about crypto is that, oh, look, there's sort of these new chains that are much faster,

• 6:57Speaker 02

  higher throughput and can actually support like high frequency trading. Long story short, I was also like getting the itch to like work on a startup. And so that's when I, you know, started looking for a co-founder, went on YC startup school, found the latest profile. He had been building on Solana and was deep into Web3. And yeah, I guess that would rest his history.

• 7:15David Hoffman?

  So there's some serendipity about both of you kind of getting the want to build something itch and also need a second half, a plus one for my journey. Again, like I said, I can totally relate. But when did the idea for Tensor come to be? Because it sounds like the idea to build Tensor came after the idea to build a startup. So where did the Tensor idea incept from?

• 7:38Speaker 01

  Yeah, I think it's pretty common for like founders to change ideas. So when we met, we actually did this like funny exercise when we went through like a two hour call and a like a 40 bullet checklist, just asking each other questions like, what is your risk appetite? You know, like, how hard do you want to work? How many like hours a day, like, are you going to be putting into this? Like, how serious are you? It might sound funny. It's almost like a dating checklist. But when you're picking a co-founder, you're basically picking like somebody you're going to be spending as much time with, if not more, as your actual partner. And so I think it's really important to do that. And I think like, once we aligned on that, then there was like, okay, what are we going to build? And we had a couple of ideas. We sort of like thrown back and forth some DeFi ideas, some NFT ideas.

• 8:22Speaker 01

  But all in all, the feeling we were getting was that the NFT space was like 10x underdeveloped compared to DeFi. It was just like newer, they were like, it was like quirky, weirder. More people thought it was a joke, which is a good sign because that means that there's probably a market there that's overlooked.

• 8:40Speaker 01

  And like honestly, the existing products kind of sucked. It was just like point blank. And so we thought, okay, well, maybe we can build something there. Our first idea was an oracle for NFT pricing. We thought that it would power like a lot of lending and derivatives products for NFTs. And the truth is, it probably will, just not right now. I think the market is a bit too early. It's like maybe five years from now, something like that would have a market. But yeah, long story short, we built it. We won like a prize at a Solana hackathon. We tried selling that thing for like a couple of months and we had exactly one customer. Cause that was also the time when crypto was starting to go downhill and there was just like no customers. Nobody would pay for it. And that's kind of when we pivoted into our current idea, which was this more advanced marketplace.

• 9:24Speaker 01

  We just felt that there was like room for a product like that and it was more immediate, right? Like you didn't need to wait for B2B customers to come and buy your oracle.

• 9:33David Hoffman?

  What would you say are some of the things that you learned? Cause Ilya, you said that you were tinkering around in the Ethereum ecosystem for Solana. So you had some sharpened some of your teeth there in the EVM world. And then it sounds like you pivoted into the Solana ecosystem relatively early. Explain to us that experience. What was it like learning Solana? Being a Solana developer, what were the new perspectives or like the just the things that, the things that you learned along the way? Shed some light on that for us.

• 10:04Speaker 01

  I think that Solana, when I came in, was a lot more raw. There was basically no docs and if you wanted to understand something, you had to go source diving.

• 10:16Speaker 01

  But the one thing Solana had going for it was that it had a way more functional programming model, which like a lot of developers like, and I liked a lot. And I just felt it a lot easier to reason about. And so even though there were like fewer docs and I had to like go and like do stuff, there was a lot lower level. In some way, programming on Solana was better and more fun. Cause you could like think about it in a totally different way. And like, look, I'll be the first to say like, there's no good or bad way. There's just preferences. Some developers prefer the object oriented model, which is kind of more similar to how Ethereum and solidity works. Others don't. I think like with my weird brain, it just was a better fit. Yeah, I don't know, Richard. What do you think about Solana and programming on Solana?

• 11:00Speaker 02

  I would say sort of a good analogy is, so I didn't do too much of Ethereum development. I did like a couple of tutorials here and there. When I really got into Web3 and started building in Web3, my first interaction of building smart contracts was really just Solana. I think looking at how solidity contracts are written and comparing that to how Solana contracts are written. It's almost like comparing Python to writing in C++. Where in Python, you can quickly, you don't have to think about like memory management. You don't have to think about specifying read and write accounts. You just almost like think about it as like in the business sense. And you just write out, you know, the core interface.

• 11:43Speaker 02

  You specify the inputs, you specify the outputs, a couple of lines of code to implement the logic. But everything is much more higher level. And it abstracts away all the nitty gritties that Solana actually requires from a dev to think about. On Solana, right, it's kind of like C++ where you do have to think about read and writes. You do have to think about, in the case of like Rust, how do you like figure out the borrow checker and making sure that the compiler is happy? And that's actually a pretty difficult experience, especially if maybe you haven't done any low level programming before, where you haven't like dealt with C++, memory management, you haven't written Rust before. It's actually a pretty challenging experience for someone who's just getting into development.

• 12:27Speaker 02

  Maybe they come from a Python world, maybe they come from a JavaScript world, and they're trying to write their smart contract for the first time.

• 12:32David Hoffman?

  So of course, Solana has just like these very unique properties that are unique to Solana that Ethereum doesn't have, right? The speed, the cheap fees, the latency, like all of these things that all the Solana does just, you know, speak the world about Solana. How did that context about the context of building on Solana and the Solana ecosystem? How did that guide product decisions at Tensor? Because if you just copied like, you know, OpenSea, that's not really being resonant with the foundation that you're building on. So just knowing that you were building inside of this different kind of platform, how did that guide decisions and just product decisions at Tensor?

• 13:10Speaker 01

  Yeah, I think it's actually embedded into product design from day one. Like when we envisioned Tensor, even though the assets themselves are non-fungible, we envisioned people basically trading them in bulk. The same way that even if you're trading something non-fungible on like, I don't know, some real estate or something, you might actually buy two, three, four, 50 of those. And so if you look at the product, it's basically built from first principles with like, I want to do everything in bulk. And Solana uniquely enables that because you just need so many transactions and so many interactions to actually trade like 100 NFTs back and forth. To get like really specific here, we actually built an AMM before we built a normal marketplace.

• 13:53Speaker 01

  And an AMM, for those of you coming from Ethereum, is like pretty similar to PseudoSwap. There's a couple other ones out there. It's basically like letting you set up pools that automatically rebalance and change prices based on what people do when they trade with them.

• 14:08Speaker 01

  And we only added like normal, classical, OpenSea-style listings over time. And even today, about 50% of our volume goes to the AMM. And about 50% of the volume goes through normal contracts. That's very different to Ethereum, right? Like, look at the volume PseudoSwap is doing compared to Blur or OpenSea. It's like, nothing, right? And so I think that goes back to the properties of the chain, where Solana Degen trade back and forth a lot more. They really kind of want to do that, those like more advanced, like faster operations of the product. And so that's what Tensor's built for, and that's what people use it for. Richard, what else would you add to that?

• 14:48Speaker 02

  I would say a lot of the products that were... Actually, one big feature that we're about to release next week. I would say that is probably contingent on people willing to spend or transact more frequently compared to less frequently. And that's because of sort of like a time duration in that product, where without spilling too much of the beans, this product, this feature, will require you to roll over, you know, every seven days or 14 days. And you can imagine that could be pretty costly, especially if you're dealing with NFTs that are really cheap. And on Ethereum, like, some of these NFTs, if they're like 10 bucks, you might be paying 5 bucks to, you know, initiate one of these contracts, we're calling it, or orders.

• 15:32Speaker 02

  And that might be like infeasible. It might not make sense at all to be trading these NFTs like that.

• 15:38Speaker 02

  On the point about like NFTs being cheaper, I think what Solana uniquely enables, that we have to cater to and we keep in mind when we're building the product, are NFTs that are super cheap in absolute terms. So you might have an NFT collection where each NFT is less than a dollar, right? But what you can do is create these really large collections. And with compressed NFTs on Solana, which TLDR lets you create a million NFTs for less than $100, you can actually scale these NFT collections to be beyond just your typical 10K PFP size. Instead, you have a million NFTs. You could distribute this to maybe 100,000 wallets. So each person maybe on average holds 10 NFTs.

• 16:22Speaker 02

  But what you unlock here is you're able to trade much more finer quantities or more granular lump sums of these NFTs. And you don't have to think about gas fees because Solana is just so cheap for each of these transactions. So think like going back to Ilya's point, bulk transactions become especially important when you're trading 10, 15 NFTs at once because the entire collection size is a million and each of these NFTs are worth less than a dollar.

• 16:49David Hoffman?

  Right. So Tensor, of course, it's an NFT marketplace. And kind of like how I said earlier, if anyone is familiar with Ethereum, they're going to start to think about like OpenSea or Blur. When some user goes to Tensor, what's the first major difference that they'll notice? So like, oh, it's an NFT marketplace, but it also is like this or it does this thing. Like, what would you say is the first new element that people would experience when they use Tensor?

• 17:15Speaker 01

  Probably, there's maybe two things that stick out to me. So one of them is we have a very modular, composable UI. So you can like close different parts of it, extend different parts of it. You can have like a floor price chart. If you come from like TradFi and you're used to Bloomberg, that's like very similar. Like you can like move around stuff, like set it up whichever way you want. That's probably one thing. And another thing I think is we sort of in the top left. So actually, this is funny, right? So our product actually looks a lot more like a perfect change, where you have like the buy/sell buttons on the left and then you can have like all the other stuff on the right. And that's again intentional. It's just the world we come from.

• 17:59Speaker 01

  It's the kind of customers we have and it's the kind of experience we wanted to create for people. Like people love it or hate it. There's very few people in between. They either like Really like it or just like think it sucks?

• 18:08David Hoffman?

  That's fine. But like, I guess the other thing I would... So it kind of sounds like Tensor has been built where I kind of consider like OpenSea to be like the collector's platform. It has higher fees, it has fewer total trades than Blur, and Blur is more like the financial NFT platform. It sounds like on this spectrum, Tensor is closer towards like the financial side of NFTs rather than like the more of the collection side of NFTs.

• 18:32Speaker 02

  Yeah, I would even like to add that the reason why I think this works really well on Solana is because I think that the NFT audience is quite different from the NFT audience on Ethereum. I think on Ethereum, you might find a larger proportion of collectors, people who like art, who like perhaps maybe what Kevin Rose is doing, or you know, some other big KOL who's launching an NFT collection. And they just want to like buy and hold that NFT for a really long period of time. I think on Solana, because fees are a lot cheaper and things move a lot faster, this almost encourages people to do more trading and to actually flip back and forth. There's also like, there's this meme on Solana where people like say, like, Solana NFT de-gens are just flippers,

• 19:17Speaker 02

  and they'll like undercut undercut and like just sell at a loss like 10 minutes after a mint. And I think that's very true. We see that like happen anecdotally like very often. And I think that's just because of the culture that was unlocked by Solana being the cheap and fast chain back in the bull run, when it was maybe a bit too expensive to trade like these high-value NFTs on Ethereum. But you can just de-gen and like flip and have fun on Solana.

• 19:41Speaker 01

  And actually, I want to quickly jump in here and just say, so what Richard just said is actually really interesting. So typically, you take any market in the world, like a mature market, you'll have two players in there that are like large and successful. And what you'll typically find is that normally those players have the polar opposite ideologies. So you take Android, who's very open source and can like, you know, everybody do what they want. Then you have Apple, who's very like closed source, verticalized, like, no, this is this way or the highway. And then equally, like, you might have like Apple and Microsoft, you might have like, you know, all of these markets, they typically have like a couple of players that are like diametrically opposed. And that's because people have preferences, right? Some people want to trade back and forth. A lot of other people want to have the most secure way.

• 20:26Speaker 01

  Like, they want to get maximum security for their assets. They do not want to think about like how many nodes there are. And they would rather pay the higher fee, but they would, they want that security. And that's their preferences. And so they express that by choosing Ethereum. And so what I'm getting at, and I guess what got me excited when Solana, when I first looked at Solana was that it's, it's not better or worse, it's just different. And there's a lot fewer smart teams on Solana back at the time trying to build something versus Ethereum. And as a founder, that's the arbitrage you're looking for. You're looking for an area where you can build something awesome because nobody else is trying. Uh, but you're going to see why it might actually work out.

• 21:06David Hoffman?

  So as you guys, um, think about the direction of Tensor, how do you think about like the North Star? Like what, uh, what is always the thing guiding product decisions? What like metrics are you guys looking to grow? How do you guys decide to prioritize things? Like, what is the North Star for like what the future direction of Tensor looks like? Is there any like sort of perspective you can give there?

• 21:27Speaker 02

  Yeah, so I think maybe this goes into the question of like, what is the vision for Tensor? In the next two, three, five, 10 years?

• 21:35Speaker 02

  The, the high level statement of what Tensor is going to become is we want to become the financial stack for NFTs on Solana. That means we want to capture as much of any sorts of financial transactions involving NFTs on Solana. And that might mean tracking market share in some respects. That might mean tracking the number of users interacting with NFTs on Solana and how many of them are interacting with their smart contracts. I think our North Star is basically we want to become the base liquidity layer for NFTs on Solana. So we first started off with this NFT marketplace. You can think of that almost like a spot exchange for tokens, right? Or in TradFi, you have like these spot exchanges like NISI or NASDAQ.

• 22:19Speaker 02

  And a lot of liquidity flows in and out of there. People perform arbitrages between the spot market and perhaps derivative markets. They hedge using the spot market, so on and so forth. That's almost like the base layer and fundamental to us building this financial stack. Now that we have the vast majority of liquidity on Solana for that market, for that spot exchange for NFTs, now you can start building more interesting things on top that enable different ways of trading, different ways of financialization. So the next product we'll release, and here's a bit of alpha, is that instead of perhaps being able to only buy an NFT and having that capital locked in, you can become much more efficient, right? You could perhaps only spend a fraction of that amount

• 23:05Speaker 02

  and be able to get exposure to an NFT collection that you're very bullish on. And likewise, you might be able to do it on the other end, where if you think that, okay, I have too much risk in holding 100 tensorians and I want to hedge myself a bit, I can also do that with this new feature. So that's really what we're trying to push towards is we want to build the fundamental protocols at the very bottom of financialization for NFTs and then have other people build on top of us, right? Instead of trying to own the entire pie, being a closed ecosystem, we think one thing that's special about Web3 is the idea of composability and actually having other people build stuff on top of us that we wouldn't have the bandwidth or the time or even the expertise to build.

• 23:50Speaker 02

  So if someone wanted to build a vertical marketplace for RWAs, but they don't want to chew glass and figure out how to write a robust, battle-tested marketplace to enable the transactions of these RWAs, then you can just build on top of Tensor. We'll give them plenty of incentives. We'll essentially give them access and distribution to all our existing users who are already using our protocols and can see all of their listings that they will put up on the protocol. And then it's just a no-brainer for someone to use our protocol versus completely reinventing the wheel and trying to build their own marketplace.

• 24:24David Hoffman?

  It kind of sounds like you're trying to make Tensor the A super app on Solana, starting with the first app that you guys built, which is an NFT spot exchange, but then allowing others to build on additional modules or smaller apps, liquidity apps, or something like this. Is that a way to interpret this?

• 24:42Speaker 01

  We don't like the term "super app" too much because we think it's been overused, but I think broadly that's correct. Maybe another way to think about it is, like, think about NFTs. They're very diverse. And, you know, by definition, like, they're non-fungible. They're all very different. And it probably doesn't make sense, like, to have a single UI where a real estate deed trades next to a whiskey bottle, trades next to, like, a punk to a mallet. JPEG. You probably want, like, verticalized, like, catered UIs to different use cases. And we can't build all of them. They're just fundamentally impossible. But what we can do is build that single unifying liquidity layer that everybody settles back

• 25:23Speaker 01

  into, so everybody gets the benefit of shared liquidity, and then give people easy building blocks that they can use to spin up their own UIs. And that way, you kind of get the best of both worlds. You, you know, like, you decide to spin up a marketplace for your, like, whiskey collection, while all the Tensorians are supporting you because you're building on top of Tensor, like, we're all get, we all have your bag, maybe there's a grant for you to build on top of us. We give you all the APIs, we give you the smart contracts, we hand-hold you, which is, like, a lot easier for you as a builder. But at the same time, you're getting that, like, very dedicated, custom experience that is awesome for just your users. That's how we see the future for NFTs.

• 26:00Speaker 02

  Yeah. To even add on to that, I wanted to say, I have this, like, very contrarian thesis, and maybe it's not contrarian in some circles, but I think in Web 3, liquidity is not a moat. It is not a sufficient moat. And that is because, like, we oftentimes compare marketplaces in Web 3 to marketplaces in Web 2, and we say that, oh, eBay has a bunch of supply and demand, and that is their moat. But if you think about, like, why that's a moat for eBay, it's because the friction of switching from eBay to some other, you know, eBay verticalized marketplace is pretty high for both the supply side and the demand side. Think about, like, the supply side. Someone who's selling coins on eBay already has this very, like, tried and true process

• 26:45Speaker 02

  of, like, one, picking the coins that someone's just bought, putting it into the mail, and sending it via eBay instructions, right? If you move to a completely different platform, completely changes your process, and so there's no reason for someone to switch from eBay to another marketplace very easily. But if you think about like Web3, everything is digital and it's very easy. Everything is digital and composable. All you need is a wallet and you can connect permissionlessly to any marketplace. And so someone can quickly like move their liquidity for NFTs from Tensor to some other up and coming marketplace. That's offering a ton of incentives. What I think might be a pretty substantial moat for us going forward is actually the composability aspect of Web3.

• 27:29Speaker 02

  The reason is if a bunch of developers, if a bunch of dApps start building on top of your protocol, the friction of switching out the marketplace and integrating with, let's say, another protocol is actually pretty high. Like the last thing that Dialect, who actually built on top of us for their stickers that, you know, people could trade inside their app. If they were to like try to integrate another marketplace, one, it would just add a lot of unnecessary dev work. That is not crucial to their business model, which is getting more people in their chat app. And so I think like encouraging composability, actually getting people to build on top of you is probably the biggest moat you can have in Web3. Compared to the whole liquidity moat that people talk about a lot.

• 28:11David Hoffman?

  Yeah, I think the way that we articulate this at Bankless is what we call the Protocol Sync Thesis, which is that the protocols that are down in the bottom of the stack, of a tech stack of composability of composed protocols, you know, Money Legos. The ones that are at the bottom are the most sticky. And the more apps or more other protocols that are built on top of a deeper protocol, just the more weight that system has, the more just like of a black hole that thing is. You can think of MakerDAO inside of the Ethereum because this system is like a very heavy, high-gravity, high, like, it's a whirlpool of other apps because everyone's using DAI. And so I totally align with that kind of thesis. And that is where like ultimately liquidity will flow.

• 28:53David Hoffman?

  And I totally agree, like liquidity is not the moat, but liquidity flows towards systems that have many, many, many protocols built on top of it. When we talk about What's at the bottom of the Tensor stack? You said that maybe we shouldn't have real estate and JPEGs be trading right next to each other. That's probably not too appropriate. But at the very bottom, at like the center of the black hole, what are the things being shared by like any or all NFTs? Like, what are the contracts that are, do have some sort of just like network effects to them? And maybe what are the contracts that maybe are after that? That maybe don't share everything, but still share some things? Like, where do like some of the network effects actually come from?

• 29:33Speaker 01

  Yeah, I'd say probably the way it's set up right now is at the very, very bottom, right on top of Solana's runtime, you have the standards themselves. The most popular standard on Solana is MetaPlex. That's the one that everybody uses right now. It supports things like programmable NFTs, compressed NFTs via bubble gum, a bunch of other things. And so that's kind of the very first layer. Right above that sits our spot exchange contract. And we have a couple of those, one for compressed NFTs, one for what we call legacy NFTs. And we can talk about the differences later if you want to. But basically like different types of NFTs, spot exchange contracts. And then what goes on top of that is another layer of contracts. And that's the contracts that do the more interesting stuff.

• 30:18Speaker 01

  It's the product that Richard mentioned that we're going to be releasing shortly. It's a couple of other ones that we have out there, one for like gaming. But it's kind of really the more creative stuff that sits on top of that.

• 30:30David Hoffman?

  Right, before we were talking about the assets and then we were talking about the financialization, the actual like app.

• 30:35Speaker 01

  Exactly.

• 30:36David Hoffman?

  Right.

• 30:37Speaker 01

  Exactly, yeah. And so one big thing for Tensor in 2024 is going to be open sourcing and decentralizing all of those contracts. That's probably the biggest roadmap item for us heading into this year.

• 30:47Speaker 02

  Maybe to answer your question about like where are the network effects coming from? The concrete example is if Dialect builds on top of us, then any listings or bids that Tensor users place on tensor trade show in the Dialect app.

• 31:04Speaker 02

  And any trades that Dall-E like users place in their app shows up on Tensor. So you start building this like network of users that are each using DApps separately, right? They may be overlapping and for the most part on Solana right now, it's, there's a lot of overlap, which is fine, but you can imagine that as this network grows, there's going to be more and more disjointed set of users, but all of them don't really need to think about what the other users are doing. All they care about is if I listen to NFT, do I get the maximum distribution? Do I get the maximum number of buyers who will buy my NFT? If I place a bid, do I get the maximum number of sellers who maybe own an NFT from that collection? That can sell into my bid. So that's really the network effect is actually this user graph between all the different DApps.

• 31:47David Hoffman?

  Mantle, formerly known as BitDAO, is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle network. A brand new, high-performance Ethereum Layer 2 built using the OP stack, but uses Eigenlayer's data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 onboarded, like Game7 for Web3 gaming and Bybit for TVL and liquidity and on-ramps. So if you want to build on the Mantle network,

• 32:29David Hoffman?

  Mantle is offering a grants program that provides milestone-based funding to promising projects that help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantle.xyz and follow them on Twitter at @zeroxmantle. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world. And now, something big is happening. Introducing the Cello Layer 2. It's a game-changing proposal that's going to bring Cello's rapidly-growing ecosystem home to Ethereum. Vitalik has shared its excitement for the Cello Layer 2 on the Cello forum, so has Ben Jones from Optimism. But why? The Cello Layer 2 will bring huge advantages like a decentralized sequencer, off-chain data availability, and one-block finality. What does all that mean? Rock-solid security, a trustless bridge to Ethereum.

• 33:14David Hoffman?

  Ethereum and more real world use cases for Ethereum without compromise. And real world adoption is happening. Active addresses on Cello have grown over 500% in the last six months. With the Cello Layer 2, gas fees will stay low and you can even pay for gas using ERC 20 tokens. But Cello is a community governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forum. Follow @celloorg on Twitter and visit cello.org to shape the future of Ethereum. Let's dive into the roadmap a little bit more. Richard, you already teased an app, a feature, a product that's coming soon, TM, to the Tensor vertical. Just maybe some more things like that. What are some near term features, some, you know, things that you guys are focusing on in like the, you know,

• 33:58David Hoffman?

  six months to 18 months time horizon?

• 34:00Speaker 01

  Probably the biggest thing for us right now is open sourcing, decentralizing protocols. And that's a lot of work because like any good startup, when we were building them, we took shortcuts because we wanted to get to market faster. And now that we're trying to make it a public piece of infrastructure, you kind of have to rewrite certain parts. That's what we're doing right now. Once that is out, there's another probably three, six months of like getting the docs in order, spinning up APIs, working with other providers to support them and just building a developer community, right? That thing doesn't just come together by itself. So like a monumental piece of work, pretty excited for it, but that's probably like the biggest thing.

• 34:43Speaker 01

  And then other than that, I would say the second priority for this year is going to be exploring advanced financialization of NFTs. There's a lot of new assets that are coming on chain very, very fast. That includes digital native assets and real world assets. You guys talk about that a lot.

• 35:00Speaker 01

  And, you know, they're going to come to Solana the same, they're going to come to Ethereum, and we want to be in a position to offer interesting financial products for those assets when they're here.

• 35:08David Hoffman?

  Something that's happened in the Solana world was the GTO airdrop. And my interpretation of the GTO airdrop is it was an airdrop that like completely changed the entire Solana ecosystem. It wasn't just about GTO, it was really about, there's like a before GTO and an after GTO for Solana. How was that experience for you guys at Tensor? Once the GTO drop was dropped, how did things change? I'm assuming activity went up, users went up, volume went up. What was that like?

• 35:35Speaker 02

  Yeah, we're pretty close to the GTO guys. They're awesome. Like they're probably the top 1%, if not 0.1% of builders that we met in this space. And they're just hardcore, like validate, they know everything about the Solana client. They've built this like MEV add-on or module on top of Solana client. They're rock stars. And like the success of the GTO airdrop just like is a testament to how well they've executed. And they've like grown their market share of clients from like 0% to like 40% within a couple, within like a year, if not just over a year. When it comes to the airdrop and just like airdrops in general that are successful on

• 36:14Speaker 02

  Solana, what that does to the entire ecosystem is it almost creates this infusion of capital. One, from people who are interested in Solana, but they haven't really dove into it. But when they hear about this massive GTO airdrop that happens to reach, you know, certain exchanges outside of, outside of Solana that are not DEXs, that draws in a lot of excitement and attention. And that's great because now people are interested in Solana. They're like, oh, what's this GTO client that these GTO guys are building? Oh, look, this Solana blockchain is actually, you know, it's legitimate. It offers a different value prop than Ethereum. And they're really great builders who are doing cool stuff here.

• 36:57Speaker 02

  Let me move my capital, let me move some of my capital from maybe other blockchains into Solana and start experimenting with the chain. And so what we saw ultimately afterwards was that a lot more people started trading NFTs. There was actually the volume increase, I want to say like 2, 3X. Our user count increased by 2, 3X. And that was all within a couple of weeks before entering and after the GTO airdrop.

• 37:22David Hoffman?

  Did that change anything about what you guys needed to prioritize or focus on in terms of products, or did anything get stress tested? What did you learn from that experience?

• 37:32Speaker 01

  Yeah, everything got stress tested. There are parts of the backend that had to be basically rebuilt pretty much immediately. We definitely had a couple of late nights.

• 37:42Speaker 01

  But that's the startup for you. You built for your current user size and then discovered that a lot of it breaks when you 10x. So we're very lucky to have that problem.

• 37:52Speaker 01

  And I think other than that, it just like, even Solana itself, right, was put to the test, like the fee markets that Solana has developed. I think there's now questions about whether they work exactly the way they should, or whether you can do them better.

• 38:07Speaker 01

  Again, I think both Solana and us are just lucky to have users, and the more than we have, the more we'll discover what breaks and rebuild it to make it better.

• 38:15David Hoffman?

  Talk to me about the tensorians. So first, explain what they are and maybe the decision as to why to make them in the first place.

• 38:25Speaker 02

  Yep. So there are three, I think, big benefits that we've discovered by launching an NFT collection. So basically what we did, I want to say back in-

• 38:34David Hoffman?

  Tensorians, they're an NFT collection. They're the NFT collection of tensor, right? And so, yeah, just wanted to drop that context in there.

• 38:42Speaker 02

  Yep. It's our 10K PFP collection that we launched back in, I want to say, November of 2023, maybe even earlier. Lost track of dates, doesn't matter. But we essentially

• 38:55Speaker 02

  almost, we essentially gave these tensorians to all the people that have been trading and using tensor for, you know, the past year before that drop for the tensorians. And one of the biggest reasons of doing this is we wanted to, one, reward diehard users who have been around, stuck with us since the very beginning, when we were 0% market share and we had nothing more than just like a fancy UI that was different. We wanted to reward them with something that was tangible and something that they can rep on their Twitter PFP and say like, hey, I was here first. I was one of the early users of tensor, and so I got a tensorian, and here it is to the world. Two, um, it actually almost becomes a growth hacking strategy.

• 39:40Speaker 02

  Where now you have a bunch of users who got this tensor in for free, essentially. And they want to rep it because they want to show that they were early. They supported tensor since from the beginning. And they're putting this on the Twitter PFP. Now, every person who sees their profile on Twitter sees this like really interesting PFP. And start to ask questions like, oh, where is this from? Who created them? Why is this? Why? Why do you like four, five out of every four, four or five out of every 10 Solana users have this as their PFP? And I think that draws intrigue and it gives us attention. And then people start looking into tensor. They start wondering, oh, it's, it's a NFT marketplace that's starting to climb up in market share. Let me try it out. Let me see if this is actually a product that I would use.

• 40:25David Hoffman?

  Making a PFP collection is a completely different skillset from making an NFT marketplace. Uh, that is like high performing with, you know, a financial backend. Like these are, you have to do like the properties, you have to do the arts, right? Like this all is very, very, you know, far away from probably what you guys would consider your core competency. Talk about that experience of doing something like pretty different and new than, than just building an NFT marketplace. Was that hard?

• 40:52Speaker 01

  I would lie if I said it was easy, but uh, I think looking back is probably worth it. And it taught us a lot about how our customers work and think. Cause we basically became our own customer, if you think about it. Uh, that's maybe like another added benefit of having consorians is that we can basically uh, try a lot of stuff that we imagine for NFT projects ourselves, right? Even this new product, we'll be testing it with consorians. But yeah, it's, it's a different skillset. Uh, I will say that our team is, is kind of weird. We're like a bit of a barbell. We're on one hand, we're like very, very technical and we like enjoy the nerdy stuff. But on the other side, we're like very degenerates and we can enjoy. Like the reason we're in this market is because, to be honest, like it's just kind of fun and we kind of like doing it.

• 41:35Speaker 01

  And so I think a part of us was, we kind of had the Dijon skill set too, to do a collection.

• 41:42Speaker 01

  But yeah, I'd be lying if I said that there wasn't stuff that, you know, kept us up at night and

• 41:48Speaker 01

  just figuring out like, how do you do the art? How do you like make sure the drop goes smoothly? We also were, this is worth mentioning, so Tensurants was the first ever 10K PFP compressed collection. And compressed NFTs are these like super cheap NFTs on Solana that now are pretty popular. But back then, we, we were doing it like nobody has done it. And so we were, we were writing all that infrastructure ourselves. It basically didn't exist. Except for like some work that Diallic and Achilles and a couple of others have done before. And so we sort of like, we, we were both taking on like commercial and technical risk, I guess, with the project. But yeah, here we are.

• 42:24David Hoffman?

  Elliot, you were talking earlier about just one of the big things that is on your 2024 priority list is like, you know, hardening down the system and being ready for decentralization. And when you give your community an NFT, a PFP NFT, you actually kind of give them like a face, like a, a, a uniform to wear, an identity to rally around. And I would imagine that once this PFP gets out there and you give a way for your community to express their, you know, alignment with Tensor, they're, they're, they're where the Tensor like flag, for example. All of a sudden, you give them a way to, you know, express their identity as a collective. And they get to have a voice as a collective.

• 43:06David Hoffman?

  And it's probably starts to become independent from, you know, any sort of top-down statement of leadership or, you know, they could start, get to have their own kind of sovereignty and their own community. But how has the Tensorian tribe evolved? What, what are they like? Who are they?

• 43:23Speaker 02

  I think initially we had obviously a lot of traders who were perhaps maybe a bit more mercenary to some extent, where they saw Tensorians as, oh, cool, I got something for free. Uh, I'm gonna flip it and, you know, just, just leave the community. I think over time, the Tensorian identity and the collection has almost rallied behind the idea that we're a Solana-first NFT marketplace and eventually NFT financial stack. We're trying to push the boundaries of what can be done with NFTs on Solana. For example, all of our work that we put in to supporting compressed NFTs, that's a very uniquely Solana thing. And we were one of the first ones to jump on it, if not the first marketplace to jump on it.

• 44:05Speaker 02

  And I think that's what people are rallying behind in that we're double downing on Solana and seeing what we can do on this chain. And that is basically what our community has become. It's everyone who believes strongly in Solana, the future of Solana, why it's going to be one of the top L1s, one of the highest throughput, battle-tested L1s out there. And they just want to like, support us on the way. They just want to support Tensor in achieving, you know, our vision for NFTs.

• 44:31Speaker 01

  I think people get into the crypto because often because of speculation or like, somebody told them number would go up. But actually, unironically, or ironically, I think a lot of people stay because they find a sense of identity. I think they find people that they have more in common with than some of the other folks in their life. And that's a very unique period in human history where that is happening. Like, if you think about it before COVID, that was kind of like, not a thing. Then COVID kind of took things online and then these NFTs, they popped right after. There was a reason for that. I think people were lost. A lot of people were lost.

• 45:10Speaker 01

  And I think this, this is one thing in crypto that like, gets me out of bed excited is that I think there's, there's more people in the world now that feel a sense of belonging than before NFTs and crypto.

• 45:22David Hoffman?

  Yeah, and just to go down memory lane, that's actually kind of the thing that I saw happening in the Solana community during the FTX implosion, where you saw some of just like, the, the, the pain and the frustration in the Solana community at that moment. But you also never really saw, you saw, you saw a lot of them experience the same emotions. Because, you know, that, that was painful. But when I saw it, like, oh, there's a handful of Solana people that are still in my feed and they're all kind of experiencing and expressing the same things. Like, oh, that's, that's a tribe. That's what a tribe is. Uh, and that's when I kind of saw like, oh, like, you know, if they, if Solana doesn't go to zero, it's going back up in that present moment. And that's kind of exactly what happened.

• 46:05David Hoffman?

  Over the following year where like Solana just like chewed glass for a whole year and the foundations of the Solana app layer grew from like, you know, its rudimentary primitive state to a very expressive ecosystem that now can support their own like sub communities. As we move forward into 2024, you know, it's like January, we got the whole rest of the year. What makes you guys optimistic about the Solana ecosystem, just zooming, zooming out beyond Tensor? What's, what's to be excited about in the Solana world?

• 46:34Speaker 02

  I think maybe what changed since last year is, one, when we're seeing all of this momentum coming, coming back into the ecosystem, the chain has performed exceptionally well. In that, while not exceptionally well, there are obviously like kinks, sometimes transactions don't go through. But we're not seeing a sort of the liveliness failures that we saw last year. When there were a lot of dejamens happening and that took down DeFi and other stuff. Why is that important? And that's because I think Solana might be one of the only high throughput chains that have seen this much traffic and activity come out the other end and are now able to withstand all of the past liveliness failures that happened during the bull run.

• 47:19Speaker 02

  And if you think about like, just the outlook of crypto in general, I think we're coming out of this bear market. People are starting to get more optimistic about more like higher risk assets and especially crypto like eating the world and making people bankless.

• 47:35Speaker 02

  And I think like, it's really important for us to have solid battle-tested infrastructure so that we can continue onboarding the next million people, the next hopefully billion people. I think Solana is one option. I think all the other Ethereum L2s are also like, they're doing like spectacular work in terms of scaling up Ethereum. I think Solana will, has enough momentum going that they will continue to survive and draw more DApp developers, draw more developers in general to build on top of it, build cool consumer apps. I can't tell you like what specific consumer app is going to take off and what I'm bullish on specifically. But I think the, the fundamentals are there for Solana to take off.

• 48:16David Hoffman?

  Oh yeah, what would you say?

• 48:17Speaker 01

  I think for you, FireDancer is gonna be pretty exciting. I think that's when Solana transitions from the way it totally calls it beta to alpha, because you're gonna have multi-client now, and that's pretty important. I think it's also like taking what Solana was built for and taking it to the logical extreme. And so seeing how that plays out and what use cases that opens up is gonna be pretty exciting. I think like for us, like crypto natives, the use cases that we think a lot about, they actually don't require that much throughput. Like how many transactions are you realistically gonna send an hour? But there's a whole swath of use cases that are not human-based or human-executed. They're machine-executed, right?

• 49:00Speaker 01

  So machines exchanging value in like small increments back and forth. Like maybe one day your meter sitting on the wall is trading back and forth with the electric grid, depending on the time of day, and you know, your solar panels are either paying into the grid or you're taking it from the grid. And I think all of those use cases require basically what FireDancer is gonna do to Solana, like a super-high throughput, like almost zero-cost transaction chain. And I think the world that unlocks is just a very fascinating world. I think the future our kids will have, like, and the world they'll live in, in part because of this technology, will just be completely different.

• 49:39David Hoffman?

  So before we get to that world,

• 49:42David Hoffman?

  Solana is currently going through kind of like an airdrop season. Is Tensor going to join that airdrop season?

• 49:50Speaker 02

  No comment.

• 49:52David Hoffman?

  Nothing?

• 49:53Speaker 01

  We're not, we can't, we can't comment, but we can say that we believe in Web3 and we believe in the power of decentralization. And we think that people that have supported us from day one.

• 50:09Speaker 01

  Should go through that process with us.

• 50:13David Hoffman?

  If people are interested in learning about Tensor, maybe this is probably, this can be largely Ethereum listeners and then the few Solana listeners that come to Bankless whenever we do some Solana content. I'm sure they've already heard of Tensor and have used it, but if people want to learn more, where should they go?

• 50:27Speaker 02

  Probably the best place to start off with is just our Twitter.

• 50:32Speaker 02

  So it's twitter.com slash tensor underscore HQ. That's where we post most of our big announcements. So when we do our big feature drop next week, there's going to be a massive thread. Hopefully get a lot of engagement and I'll just walk you through this really cool product. That to our knowledge is pretty novel when it comes to the DeFi NFT space across all of crypto.

• 50:56Speaker 02

  I think frankly, like the best way to learn more about Tensor is just listening to more podcasts that we've done in the past. Cause that's where we distill most of the high level of information into easily listenable packets. You know, usually within, you know, one hour, you can listen to it while you're working. You can listen to it while you're, you know, exercising or going on a run. That's probably the best way to learn about the high level of Tensor. And of course, once you like Tensor, you could join our Discord, you could join.

• 51:27Speaker 02

  You know, our Discord community is probably the biggest community where most of the Tensor users are communicating back and forth. And that's, that's where you get the, the really like bottoms up feeling of, of what Tensor is.

• 51:39Speaker 01

  I have one more thing to add to that. I think everybody should fill their Solana wallet with exactly $1. Go on Tensor to a collection called Drip. There's a number of them, pick any, it doesn't matter and sweep 10 NFTs. And I think you'll feel the magic of Solana. I think you'll feel the magic of Tensor. There's really nothing that comes close to it. We can talk about it all day long, but until you go and do that, it's going to cost you $1. It's worth your time. You're just not going to understand what we're talking about. But once you see it and you see those like 10 transactions that you're doing, just like boom, boom, boom, boom, boom. Within like a couple of seconds appear on the screen, it's just a magical feeling. I think everybody should do that.

• 52:17David Hoffman?

  Awesome guys, well we will get the, all those links in the, in the show notes. And Richard, after this episode's done, I'll go and ask you for your favorite podcast episodes to get those in there as well. Ilya, Richard, thank you guys so much for joining me on Bankless. I enjoyed exploring the Tensor ecosystem on Solana today.

• 52:31Speaker 02

  Thanks for having us. Thanks for having us. It was fun.

• 52:35David Hoffman?

  Bank of the Station, you know the deal. Crypto is risky, NFTs are risky. All ecosystems are risky. You can lose what you put in, but we are head west. This is the frontier. It's not for everyone, but we are glad you are with us on the Bank of the Street. Thanks a lot.