[00:00] - Antonio
Welcome everyone to the Zerogoki community call. As you know I am Antonio, one of the core members of Duet Protocol and the host for today's call. Along with me today are the other core members of Duet: ZW, JBach and Leopold. As you all may know Zeragoki is going through the transition phase and Zerogoki tokens: REI and zAssets are being migrated to Duet. We have received a lot of queries and feedback in terms of the migration plan. The agenda for today's call is to discuss all about the migration happening and let you know more about Duet Protocol and it's future plans. This call is going to be of three sessions. First, we are going to have some brief introduction about the recent updates and Duet protocol. Second, we're going to take live questions from the audience and in the third session we're going to take up the frequently asked questions that were collected in the Telegram and Discord group. The purpose of today's call is to find solutions to the problem you may have been facing so far and getting the feedback from you all so that as a team we can plan better and give you better options for the migration. Let's begin our session today. I invite Leopold to give us a brief introduction of Duet protocol and the bigger picture of the whole Duet ecosystem.
[02:19] - Leopold
Thank you Antonio. Hello everyone, I would like to share with you all what Duet is and what we provide as a protocol. Duet Protocol is a synthetic asset protocol based on a hybrid mechanism over collatover-collateralizationeralization method and algorithm stabilized model. Duet enables on and off ramp between traditional real assets and crypto assets. Our vision is to build an on-chain parallel space governed by a DAO which allows users to create and allocate capital to any asset with only one crypto wallet. Increasingly as we move to the later part of the bull market, investors will be looking to diversify the risks across different asset classes and gain exposure to asset classes whose return is supposedly better than crypto assets during the bear market. That's essentially the needs we're addressing here at Duet. There are obviously some competing projects out there. Many of them have a lot of issues that has to be resolved. First one is they have a limited liquidity. For example, some projects accept their own token as a collateral to mint a synthetic asset. At what Duet protocol our solution is aimed at connecting more liquidity. On top of accepting our own token as collateral we also accept three general classes of crypto assets as collateral. First being native tokens like bitcoin, Ethereum, Binance Coin, etc. Second class is interest bearing tokens, for example liquidity that's currently locked up in Compound, Aave or LP tokens locked up in Pancakeswap or Uniswap. So these interest bearing tokens can be used as a collateral in our system. And lastly we also accept some cross chain POS tokens like bLUNA. Duet will unlock liquidity which is currently locked up in other protocols to enhance the availability and scalability of our synthetic assets. The second problem in a synthetic market is that there is a reliance on over-collateralization. If you have a look at MakerDAO, Mirror Protocol or Synthetix, they all rely on over-collateralization which sacrifices capital efficiency for security. And as you probably know that Duet is adopting a hybrid minting engine which also allows user to burn Duet token to generate synthetic assets. It's similar to what we have at Zerogoki. We are upgrading that system where it will balance the long and short positions with algorithm based mechanism to reach a protocol level risk neutrality. And the third problem we're addressing is minting synthetic assets. Minting a synthetic asset is essentially shorting this asset. This requires the protocol to subsidize a minter substantially to cover the losses. If the minting reward is reduce, the liquidity normally dry up very quickly. At Duet we have a new mechanism to solve this problem which is called market making mechanism where we only ask liquidity providers to mint an asset that investors would like to purchase. We allow the market makers to open an equivalent long position in the underlying market to hedge their short positions when providing liquidity to the Duet system. By doing this, the market makers essentially connects the liquidity of traditional markets to the crypto market, where large long or short orders of certain synthetic assets that is otherwise not going to be able to be satisfied by liquidity in a typical AMM swap will be filled by the liquidity in the actual underlying market affecting the price of the underlying assets too. So there's going to be an arbitrage opportunity between traditional assets and synthetic assets which will help to eliminate the price divergence between the two assets. Duet system generates income anytime synthetic assets are minted, traded or burned. All the income is transferred to the treasury and subsequently used to purchase token. Some of the tokens will be rewarded as an interest paying bonds to the miners. They provide liquidity when they vote or when they stake their tokens in our security pool. We expect Duet system to provide a variety of synthetic assets to investors with high liquidity and price precision achieving market maker risk neutrality and protocol level risk neutrality.
[07:50] - Antonio
Thank you so much Leo. Next I would like to invite JBach and talk about the migration plan for Zerogoki to Duet. What's the need for that and just elaborate a little bit more about that for everyone.
[08:13] - JBach
Zerogoki is an experimental product. The users need to understand the design mechanism of the protocol and analyze the risk before participating. In contrast to Duet Protocol's more robust risk control method, Zerogoki takes on a certain pressure test task for Duet. So its risk and income structure are significantly different due to the difference in the mechanism design. Unfortunately, the system was in a death spiral due to hacking and constant rise of the synthetic assets side, but we did try our best to stop the negative loop. Instead of selling any tokens, the team has subsidized close to $1 million in cash to try to get the system back, but unfortunately we still couldn't fix the situation. We hope to launch the fully function Duet Protocol so as to help existing users to recover their losses as much as possible and at the same time try not to bring excess selling pressure when the new Duet token system starts. So that's why we have a relatively long vesting period, but some of the community members don't want a long vesting period, so definitely we think it's negotiable because the community is built by everyone and that's part of the purpose of today's meeting. However, we must realize that many people have made a lot of money and already left Zerogoki system, so the migration plan is difficult to satisfy everyone. After all, Duet has many private investors. If all cash is converted to the current REI or zAssets the interest of those investors will also be harmed and Duet will also lose important operation and development funds as well. This really needs to be understood by all the community members and the remaining funds have to be focused on Duet then it is possible to achieve a win win for all at the end. So the current migration plan actually is relatively has some of the detailed design. Everyone could read the entire article on Zerogoki's medium. Zerogoki is the test protocol for Duet and was launched fairly. So some of its core designers are also contributors of Duet protocol. It's two different product and has a totally different mechanism and this must be realized by everyone. Duet Protocol's treasury sponsored this test protocol from day one and tried it's best to support Zerogoki. Since most of the Duet contributors would focus on the development and the operation of Duet in the near future, Duet Protocol decided to offer around 5 million Duet tokens to be reward and compensate for REI and zAssets holders. The detailed rule is not hard to understand. Generally speaking Duet protocol provides 5 million Duet tokens in the vesting pool. The number of vesting certificates for REI token will be issued at a price of $2 for each REI and the number of vesting certificates for the zAssets will be issued based on the Oracle price at a ratio of 1:1 when the minting function was shut down. So for example, if the price of the zMVI2S was $4 when the minting function was shut down, users can get 40K vesting certificates if he or she has 10K of zMVI2S tokens. Let me give you another example. If the total vesting pool only has Jack and Amy who have deposited REI or zAssets in the vesting pool. Let's say if Jack deposits 100 REI tokens in the investing pool and Amy deposits 200 zUSD, so you can see there are only two people who have shares in the vesting in pool and their shares will have the same weight because one REI token will be $2 in the pool. So Jack and Amy are actually going to split the 5 million Duet token equally. So if more people join the pool, the 5 million Duet token will be allocated according to the same rules. The current vesting two way design is around four years. This is to ensure the healthy growth of the Duet system. But if the community members, any of the community members disagree with this period, I think we can reach some balance between the vesting amount and the vesting period. So definitely investing period could be shortened but at the same time the vesting amount should be also reduced. So this will be an open discussion in the community.
[15:49] - Antonio
Thank you JBach. Now I request anyone in the audience if they have any questions for the team you can raise your hand.
[16:19] - Audience 1
All I want to know when will the migration to take place? Will it happen before or after the IDO?
[16:30] - Antonio
The migration will happen before the IDO.
[16:32] - Audience 1
So in this case I want know how will we know how much 5 million Duet is going to be worth?
[16:42] - JBach
This is a good question. We actually raised some of the money at the price of $0.40 per Duet from several private investors. So 5 million Duet token will be worth around $2 million in private round 2 price. So that's why we choose 5 million Duet token. Based on our calculation, the circulating zAssets and REI tokens around the users is worth around $2 million. So this is actually nearly one on one conversion.
[17:33] - Audience 1
Can I ask you a question about the $2 million to make sure? Because I was checking the supply of zAssets and REI token, it seems that their values is much higher than the 2 million US dollar. Is my conclusion right or is that the price is actually much smaller? So how did you come to the $2 million?
[17:58] - JBach
Because still the foundation and the team holds a lot of the zAssets. So you may see the zAssets existing on blockchain is much more than $2 million but a lot of is under controlled by the foundation.
[18:19] - Audience 1
So am I right to say that those foundation tokens will not be participating in the migration?
[18:25] - JBach
Yes, they will not be participating.
[18:28] - Audience 1
For all the other tokens held by the community members if you value them at $2 and $1, you add all of them up and comes exactly $2 million which is basically the price of the 5 million Duet tokens. Am I right to say that?
[18:48] - JBach
Yes, all the circulating REI token and zAssets from the user side will participate in the migration plan. The team's share will not participate in this 5 million Duet token migration plan. This equals all REI and zAssets holders to that of the private round of the Duet system.
[19:26] - Audience 1
I see right now the REI token is trading around $0.15 while the zUSD is trading around $0.20. So based on what you have said this will focus on the price. Is that right to say that?
[19:43] - JBach
Yeah, I definitely agree with that. But not everyone can understand the migration plan. So there will be undervalue of these tokens, but relatively we made a long vesting period for the migration, so I believe not everyone are willing to hold those tokens for 48 months.
[20:14] - Audience 1
Just one last question. Do we need to move all our tokens from Ethereum or Polygon network to the Binance Smart Chain for the migration?
[20:29] - JBach
Under the current plan the answer is yes, it needs to be migrated to Binance Smart Chain but we have made two different bridge plans for all the token holders. People may not need to actually pay much gas fee to get them bridged.
[20:59] - Audience 1
Okay, because I once transferred tokens from BSC to Polygon. I think the gas fee was about $40.
[21:11] - JBach
Yeah it is costly. The transfer must go through Ethereum, so that will be costly. We noticed that and we are developing a new plan for the migration. Maybe just transfer those tokens to the Foundations account on different chain and the foundation account will actively send equivalent tokens on another chain to the user's same address.
[21:50] - Audience 1
Okay, sure, I see. That's all for my question. Thanks a lot.
[21:56] - JBach
Thank you.
[21:57] - Antonio
Thank you. Anyone else wants to ask questions to the team?
[22:29] - JBach
I think the most concerned question is about the vesting amount and the vesting period, so it can be an open discussion in both Telegram and Discord.
[22:46] - Antonio
Okay, if we don't have anymore live question let's go to the frequently asked questions and I request core members to help me answer these questions. So we have around ten questions which was asked in Telegram and discard. So the first question is what happened to zUSD? Will the price go back to $1?
[23:24] - ZW
The price drop i think it's mainly because a lot of zUSD liquidity mining has been ended because it always has a period of time. The zUSD liquidity is mainly concentrated on Babyswap side and the liquidity mining incentive period is just for one month. As we are trying to migrate Zerogoki to Duet protocol, so we tend to not re-subscribe to the zUSD liquidity mining incentive. But I have to stress here that zUSD are going to be counted into $1 full price during the migration process. Users do not need to concern that zUSD is under priced. We are going to make into $1 during migration process.
[25:01] - Antonio
Okay, thank you so much. JBach you want to add?
[25:04] - JBach
From September to October we really tried every possible way to bring the system back. So as all of you may see we collaborated with a lot of swaps and other protocols like Deri Protocol, which recently became the superstar on the Binance Smart Chain. We cooperated with them to make more use of the synthetic assets, especially the zUSD. But at the same time the cooperations generally need us to give out the REI or zUSD tokens. I believe more than 500K rewards was given out through those third party cooperations. Because we do not have vesting mechanism or locking periods those tokens quickly became selling pressure on the open market. This was not what we were expecting to see.
[26:41] - Antonio
Okay. So there's a very common question being asked in the group- Will zUSD be converted to dUSD? And if not, why not?
[26:57] - JBach
Because based on the mechanism, Duet based on over collateralization model. So it means every dUSD at least has one dollars. Actually, it's more than one dollars reserve. zUSD is an algorithm pegged stable coin. It does not have any tokens outside of the Zerogoki system as the reserve. So that's the reason why it cannot be converted.
[27:47] - Antonio
Okay. And I think we already answered this question- Because zUSD is not pegged to $1 now so will the mining power I receive is going to be the current price of zUSD or is going to be $1. As mentioned by ZW it's going to be the same as Oracle price, so it $1.
[28:06] - JBach
So if anyone want to invest in Duet they can invest in REI token now as it's nearly invested in the same price as private round.
[28:29] - Antonio
One more very common question- What's going to happen to the REI token as it's going to be migrated to Duet? So the users want to know what are the actions they might have to take once they want to migrate their tokens from BSC to mine Duet tokens. So what are the ways they can do that?
[29:16] - ZW
I think we have covered this part. As Bach has said we are intending to give users two options. The first is based on the current stage, they can bridge from Ethereum or Polygon to BSC. That's the first option. We're trying to implement separate contracts on polygon and ethereum and users can bridge REI and other zAssets to the lockup contract and then they will receive equivalents equivalent Duet tokens on the same address on BSC network. That's our plan. We always hope users could migrate very smoothly and economically.
[30:35] - Antonio
Okay. And so if the users get the mining power of Duet, the question is whether they will be able to sell the token or not?
[30:50] - ZW
So in the meaning of the current migration plan, if users get some mining power as you said, they will gain more if they stay there longer time. But if they leave, then the other certificates or mining power will disappear. That's a basic idea here.
[31:25] - Antonio
So the longer the vesting period the longer they can make out of it. And that's why my next question is like why the vesting schedule is so long? There's a lot of query from the community like why 4 years? Why not less than four years? Why you chose such a long period of time?
[32:03] - JBach
That's because we do not want Duet system to have a very strong selling pressure when it's launched. So I believe the longer vesting period, the safer for the Duet system but not very friendly for the users. That's definitely we understand that. But considering the Duet token's price will be significantly higher than the private funding price which currently is $0.40 that means 5 million Duet token will be at least $2 million selling pressure on the secondary market. So it's $2 million selling orders coming in short months. That will mainly be a very bad scenario for the Duet system. Definitely we can reduce the vesting period to one or two years, but at the same time how much should we reduce the vesting amount? That will be a question which can discuss it through there.
[33:47] - ZW
Also I want to just add a little more to that. The goal here is that actually we are always on the same page with the users. We are not trying to lock your tokens as long as possible. That's not our intention. Our goal here is to help the system be deflationary in the long term. And I strongly believe that users could benefit from the long term lockup or cliff period. And also as we said the final migration plan hasn't been confirmed. The team is always open to discuss a better scheme for for community for users and we always prioritize all the users, especially the early supporters of Zerogoki benefits. That's idea here.
[35:07] - Antonio
Thank you so much ZW and JBach. So anyone else have any questions before we just conclude our call for today? If you have, you can raise your hands. If not, then we'll just conclude our call unless the team has. Okay, there's one guy who wants to speak.
[36:40] - Audience 2
Good morning. I will ask about marketing. In my opinion, and I think some of you will agree with me, if there is no adoption of the coins there will be no market. And if you see, I would say 98% of the coins they have no adoption at all. And if you see all the addresses 90% of the coins is in hands of three or four or five people. What are your plans with the market?
[37:22] - ZW
So for marketing side, we are now trying to focus on BSC side, and I can't say 100% for sure but there's highly possible that we can get support from BSC official for marketing side. Generally maybe AMA, NFT auction and maybe even some liquidity support because as you may have heard that BSC have just launched $1 billion fund for supporting BSC ecosystem system. And that's what we are mainly trying to get support from. And later if we deploy multi chain for Duet Protocol's version then I believe we can get support from Polygon official. Actually we are also making some NFT products on Polygon as well. If you look back to the Zerogoki, our experimental product, we actually on boarded over 30 partners for Zerogoki like wallets, swaps, yield aggregate liike harvest finance. And for now the team is focused on polishing the Duet Protocol's official products. We hope we can get a very successful primary lunch and after that we can release more news about partnerships.
[39:34] - Antonio
Apart from that, as you already might have read about us, we have global investors, so we're going to also leverage them their influence. And in terms of community we are going to have communities in different parts of the world. Our aim is to shift the whole focus to Duet because before we were focusing on Zerogoki. As we are near to the release we're going to heat up all the activities and then you're going to see more things happening. So yeah, we do have many big plans for marketing coming up soon.
[40:41] - Audience 2
I have another question. I work in marketing and we are based in the United States. I am open and I am not anonymous. I am not anonymous because I don't need to be anonymous. I have no problem with that. And one of the big things that we have been working the last five years has been getting regulation and we have advanced that a lot. And one of the very big concerns that exist and I believe I maybe wrong, but I believe that a regulation will come and will be harder to everyone to be out of the regulation. What are your thoughts about to become a little bit more visible and try to find regulation?
[41:37] - ZW
Firstly, we highly respect regulation and it's something like we won't compete with the regulation side. We are trying to find a way to cooperate with them. And the second thing is that initially I think Duet protocol would not tend to launch some security tokens or some tokenized stock tokens at very early stage. And if we do that, we tend to do that in a way of tokenized ETF rather than just pure stocks. And the third thing that I believe the whole crypto industry has been always trying to persuade regulation to be more open. Like you can say, Coinbase where paradigm they've paid like millions of dollars to launch lobby teams to try to influence regulations direction. And I think that will somehow help the startups, in the meaning of synthetic assets. That's my idea.
[43:30] - JBach
All the synthetic tokens are generated by the users through Duet Protocol and Duet Protocol is deployed on an open network which is a public chain. So it's not the team or project selling the synthetic assets. Actually it's the behavior by each user. So the current priority, not only for Duet, but for every decentralized protocol is to bring the utility to gain users. Let's considerate the regulation later, I believe.
[44:28] - Antonio
Okay. Do you have any further questions for the team? If not, then we're going to go ahead because there's one more guy on the stage.
[44:40] - Audience 2
I have another question. Are you planning to get out of anonymous or do you want to remain anonymous?
[44:52] - JBach
It's very important for the team to remain anonymous because the regulation as you say is tightening. If the whole identity of the team disclosed it's really not a good thing for the project I believe.
[45:21] - Audience 2
Thank you.
[45:23] - JBach
Thank you.
[45:24] - Antonio
Thank you. Move on to the next. Hi, please ask your question.
[45:40] - Audience 3
The Duet price was $0.40 and there is 5 million Duet in the pool for all the REI and zAssets holders. The market cap was two milion right, that was your logic?
[46:08] - JBach
Based on our calculation, the outstanding.....not clear !!!
[46:30] - Audience 3
Does it mean that REI plus all the zAssets combining them together was $2 million right? I mean the market cap.
[47:17] - JBach
No, the actual market cap is higher than $2 million.
[47:19] - Audience 3
But my question is in the upgrade rule, the REI was counted as $2, but in the two million calculation I think it's counted as the market price. Basically, it means that the real pool of all the zAsset holders plus REI holders is was way more than $2 million.
[47:59] - JBach
That is also because as we observe the trading volume of REI token happend around $2 so, that's why we choose $2 because we think a lot of....!!! (unclear).
[48:37] - Audience 3
I just disagree with the way that you do the math. like you said is based on the market price and at the current rate is 40 cent as a good price.
[48:53] - JBach
Actually, the separating market was made on the market price and the investing around December of this year. ( unclear ) !!!!
[50:19] - Antonio
We got the feedback and that is why the call for today is very important to get the feedback from you take into consideration and we talk for the rest of the team and then we finalize a better solution for you.
[50:36] - Audience 3
All right. Thanks a lot.
[50:48] - Antonio
Sure. Your opinion matters to us. Thank you. Does anyone else have any kind of questions for the team? If not, then we are at the end of the call and ready to wrap up this call. I think there's no more questions. Anything you guys want to add JBach or ZW?
[51:30] - JBach
We made some of the hard time on the Zerogoki system because we really had a lot of the pressure on the system operation because it's designed to be under pressure. So it's really a high risk protocol. Duet is based on over collateralization and the algorithm pegging. So at the beginning of the Duet Protocol you will only have over over collateralization. It will face much less pressure compared to the reality. So it's totally two different things. So we are actually very optimistic on Duet Protocol. And we are also adding a lot of exciting new features on the Duet protocol, as you may see in the following article, already a very interesting protocol compared to any of the existing over collateralization model. Looking forward to it.
[52:51] - Antonio
Okay, great. Just before we wrap up, okay. There's one guy who have a question. Let me take this last question. Just to note you guys that this call is being recorded and we're going to have recordings for all the members who couldn't attend. Or you guys want to listen again for sure. We are going to share the recordings too. Hi, you can ask a question.
[53:55] - Audience 4
My questions is in the report I see the releasing circulation for the year one. I noticed the private founding 5% will be released in year one, so that will be 5% of the total amount will be $21 million of the token Duet. I would assume there would be a lot of selling pressure at year one.
[54:42] - JBach
Actually you are looking at the older version of the Duet white paper. We already changed the token mechanism because we really suffered from the selling of the REI token. So under current design, we only offering bonded Duets both for governance and liquidity providing. So the bonded Duets will be vesting through one year. So actually in the very first year of the Duet launch there will only be very few actual Duet token sell pressure. I believe less than 5% or 10% because most people can definitely sell the bond, but there won't be Duet token selling orders.
[55:52] - Audience 4
I have another question because the market is drawing my attention as well. So I want to know what's your plan for the marketing because for Zerogoki we basically have nothing, like just on a very few small platform or couple like one or two big platform on a BSC and Polygon. So I don't know what's your plan for the Duet marketing. Like how you guys going to advertise your project? How are you going to attract people to get into the project?
[56:36] - JBach
Yeah, based on the new mechanism because Duet tokens won't have too much selling pressure. So basically just give us at least one year window to do the marketing works, not in hurry to meet the selling rush from the liquidity miners. So this will be relatively good thing for the whole project. Most of you may have seen the relatively DeFi 2.0 and the mechanism of the Olympus and also as well as the Bell (unclear) token. These projects really made a good example for us. Also including interesting DeFi projects who are cooperated with the NFT games. So we actually going to incentivize users to sell their token LPs to the system just as Olympus did in exchange of discounted bonded and Duet tokens. So we are hoping we are aiming to promote this stream to the whole market making them think this may be another Olympus DAO. So this is one of our important mechanism change will help the marketing. Also, we are aiming to launch the synthetic assets trading based on order book not on AMM. So once our order book trading system launched, we do not have to incentivize the liquidity providers. We only need to incentivize the trading behavior because during that time the liquidity will come from the professional market makers, the market makers who are willing to provide liquidity, not only for the system token but also for the spread they can arbitrate from the real world stock market and the blockchain market. This will also be a good thing for the market because during that we may be the only one synthetic assets protocol who has a nearly infinity liquidity because we connect the lower market and the on chain liquidity. It does not need the users to deposit several or tens of millions worth synthetic assets and USDT or Duet USD into the AMM pool. That's not sustainable. As you may know, you can see as Uniswap and Sushiswap their TVL are actually growing very slowly. If we do not not count the underlying assets price rise their TVL actually I believe is shrinking. A lot of project token will meet liquidity problems in the future. But we are aiming to do it fast to bring our own order book system. .
[01:00:54] - Audience 4
All right yeah, I understand a little bit. Fair enough. That's all my question for today. Thank you.
[01:01:04] - Antonio
Thank you. Okay now we are going to conclude the whole call. Thank you everyone for joining today's call. Thank you JBach, ZW and Leopold for your time.