ECOSYSTEM DAY with Alejo Pinto & Tortuga Finance

Today we have the teams behind Chapter X and Tortuga Finance joining us for our first of many Wednesday livestreams!

Alejo: Welcome Chapter X and our guest, Touga Finance! Could you tell us a little about yourself?

Tortuga Finance: First, let me say thank you for putting this together! The Pontem community is fantastic, so any opportunity to get in front of this crowd is super exciting. I’m really excited for this new series you’re putting on. We’re a member of the Tortuga community and we’ve been really excited about Aptos and launching in the first week. It’s been so much fun so far, but I would love to tell you more about all the amazing stuff we have done so far and all the amazing stuff we’re looking at behind the scenes, too.

Alejo: We’re excited to have you on board! We’re going to try to make this fun. I’ve been in a lot of these for other folks and it can definitely get a bit draining if we only talk about our products. We can try to make it fun and engaging while talking about our products, especially for the audience. Let’s hop into what we’re building in our products. Tell me more about Tortuga. How did the idea get conceived? What do you see the opportunities being on Aptos?

Tortuga Finance: So, it’s important to place what we’re working on here in the context of liquid staking across all of crypto. Across any chain, liquid staking is such an explosive trend, and I think people are really realizing how important of a primitive it is. It's that catch-up phase where you introduce liquid staking on ETH or something and all of a sudden everyone’s like, “Oh that’s a great idea! We should have this on Solana and Cosmos, etc. ” So it was a natural place for us to start with Aptos. I think the opportunity is actually very compelling for liquid stalking on Aptos because -- I don’t know if the people in the audience know this - but in Aptos, there is no public delegation. If you go to any other chain as a user, if you have like 10 Atom or 10 SOL, you can go and choose which validator in the network you want to delegate those funds to participate in proof of stake. Then you get a cut of those validator rewards.

In Aptos,  you can’t do that. So if you wanted to participate in the proof of stake process, which at this rate ,I think the network is inflating at 7% a year, if you wanted to protect your APT against that inflation, you have to go through liquid staking. There’s no other way to do it. That’s why we want to launch on Day 1 because the nuances for Aptos are really important to keep in mind for the community.

Alejo: That’s actually super important. I haven’t even thought about that. This is the one way to hedge against the inflation of staking rewards. Can you talk a little bit more about that? Where are the limits and why is this the case on Aptos? How does that differ from Ethereum or others?

Tortuga Finance: Totally. This is getting one step more technical into how the chain is actually configured. So the first thing is that, because Aptos is trying to run the chain in a more trusted fashion on Day 1, there are only 100-ish validators today. And the requirements to run a validator are actually pretty high compared to other chains. It would be great to see Aptos bring this down and we expect it to come down over time. But right now, if you want to bring up the validator and participate in proof of stake, you need one million APT. You need a million APT to get the validator into the active set. So when you zoom out to who gets the validator rewards, you either have a million APT and can run a validator, or you go through liquid staking. The other nuance that forces liquid staking here is there is only one wallet address per validator. So what liquid staking does is compile all of that. And that’s how you work around the certain requirements that Aptos has set out. We expect all of these things to change and transform, in particular, the minimum stake. But that’s all dependent on how the blockchain evolves.  

Alejo: That’s super interesting. And that compares to Ethereum’s 32, right? On Ethereum it’s technically the same thing, except 32 ETH is still a significant amount of money, it's just not $10 million worth. Is that how I’m understanding the comparison?

Tortuga Finance: That’s exactly right. Just imagine if you were required to buy 10 million ETH before you could do any of that. So it’s exactly the same thing, it’s just the magnitude is a little bit different right now.

Alejo: Interesting. I wonder if, with enough price appreciation, we’ll get there. What happens to Aptos if it stays the same and continues to price appreciate? It’s going to become a pretty high minimum threshold. What are the pros and cons of having higher and lower stake?

‍Tortuga Finance: When you zoom all the way out, I think all of this is a reflection on the learnings of the last cycle. We saw a lot of L1s gain prominence. A lot of new ones launched and a lot of them had all these issues around validators and who’s participating,etc. In the broader decentralization conversation within crypto, I feel like there’s a degree of “decentralized enough”, meaning being just decentralized enough to get out the door, and then proceed down the road. I think Aptos is a little bit of a reflection of that. Choosing to start with a limited set of validators, raising the minimum, all of these things are around enabling faster movement on Day 1. I expect a lot of this to change as things start to firm up. It just feels like there’s so many eyes on Aptos. So many things are starting to launch on Day 1. Both our teams are scrambling behind the scenes to keep up with the pace of the chain developing, and trying to make sure you’re ready for Day 1. With everyone racing to the start line, you’re forced to make some tradeoffs. You have to sequence things in a way where even if it’s a little bit more centralized on Day 1, it allows at least need and safety on Day 1 and over time, you can address the broader decentralization concern. It’s an interesting data point in how these L1s are choosing to manage and grow their community.

Alejo: That’s a very good point. It mirrors this blockchain trilemma that Vitalik famously posited around security, decentralization, and scalability. There’s always going to be a tradeoff when you’re optimizing for two. In this instance, maybe also reliability. It seems like they’re optimizing for uptime and security of the network, which might be a tradeoff on more centralization. With the right security, throughput, scalability and reliability benchmarks, then we can move towards more decentralization and reach a solution.

Tortuga Finance: I think that’s exactly right. I’m curious to get your thoughts on this. It’ll be so interesting for me to watch Sui launch whenever they do, because there’s never been a situation where you try to launch a chain and entire ecosystem all at once. And then we haven’t seen a situation where we have two teams that started at the exact same time and have a very similar technology base and then everything diverged. Sui has started to make more deeper architectural choices. A lot of the chain does not work the same way. Putting these two side by side is just going to be so fascinating in the context of the history of crypto.  

Alejo: It will be interesting to see how it develops. We’re literally at the cusp of history. I’ve talked to Mo [Shaikh, CEO of Aptos] about this and recently he did a public post saying they want to work closely together. I am in line with this viewpoint that we need to work together to see what works best and support each other with these launches. There’s a lot of hype around this launch given the huge fundraising backing the team. Compared to other launches where you have several months until there’s any activity because people need to figure out the technology, Aptos did a good job providing ecosystem resources. Also, we bootstrapped things like this and made sure people have access. We built the first IDE. I think Move also lends well to a lower barrier to adoption for new devs. There’s this second mover advantage because we all saw chains like Solana launch and now we know where things can go wrong like NFT mints. So we can make sure those things don’t happen. We’re learning a lot and seeing the development cycle accelerate. I also don’t think this is going to be the last L1 that we see. I do think there will be some power law dynamics where the most popular ones will accrue the most users, liquidity, and security thresholds. I think we will also see more niche or use case- specific chains, because I’m leaning towards getting as much of this infrastructure for the Iinternet to be decentralized and censorship resistant so that we don’t create this 1984-like, post-apocalyptic world. I think it’ll be interesting. And 100,000 transactions per second if we have billions of users just doesn’t add up, so I do think we’re going to need to do some bandwidth distributions or load balancing.  

Tortuga Finance: I love all that, and the only thing I’d like to add is that whatever L1 ships next, they better hope they have a team like the Pontem team building for them because you have done so much. It’s always tough to be first for any ecosystem and tooling. What I’ve found so impressive about the Pontem team this entire time is you’re doing both sides of it. You’re showing up on Aptos with a wallet, DEX, and all these dev tools. Any one of these would have taken a single team so much time and expertise to build and you’re building like 5 or 6 of them!. The adoption that you’re going to see because of that kind of leadership is great. You’re doing so much for the ecosystem, and teams like yours being leaders on Day 1 are going to be one of the ways the Aptos ecosystem will flourish.

Alejo: Thank you, that definitely means a lot to me and the team. There’s a lot of us behind the scenes, 30 people or so. We’re lucky to have fundraised prior to Aptos or Sui even existing, which has given us an opportunity to grow and have a pretty mature team to be able to deploy as a product studio across different verticals. We have essentially built the building blocks for the decentralized future that we want to build. I realized when I got here that there aren’t that many people building, and the ones that are don’t really know the way in which things should be built. This is a good opportunity for us to really embed ourselves in the ecosystem and work with y’all and potentially work through new ways to think of DeFi. But first, we need to get to parity. The second mover advantage of bootstrapping all the core infrastructure and DeFi primitives is something that needs to be done, and responsibly. These core primitives need to be well-built, otherwise the infrastructure will crumble if one of these gets hacked. Luckily we have the time and the funding. We raised 4.5 million about two years ago from key players in the crypto industry, and now we’re raising again. There is this excitement around Aptos and we saw this wave coming. Move and Libra were a thing in 2019-2022. People hate Solidity, so getting our hands on Move was awesome. It was a good first try, but now we’re kind of stuck with it, and we shouldn’t be. I think Move is the coolest innovation to come out of the investment that Facebook or Meta made into this project. Move is so simple and elegant, yet genius. Our original value proposition was getting the Move VM deployed on every Layer 1 that’s going to be relevant, which is still part of our long term roadmap. We first made the Move VM compatible with WASM, and later on, we looked at WASM-compatible ecosystems because the WASM runtime was becoming a standard. We figured it would be pretty plug-and-play in the future. Hopefully, tools like this will help grow the Move ecosystem in the long term. There’s money to be made from this as entities or corporations, but we first need to build scaffolding for this stuff to take off and be used by billions of people hopefully.

I’m actually super interested in this shared key, so kind of backtracking a little bit on how that actually compares to Ethereum as well. There's a large variety of liquid staking solutions and maybe you have some views or comments on them.? How does this relate to this shared staking model?

Tortuga Finance: That is a very good question, but I think it may be out of my technical depth. I’ll have to provide you with a response later once I can do a bit more research.

Alejo: That’s totally fine! At a higher level, how do you compare Tortuga with some of these competitors like Lido and other protocols that are supporting multiple chains?

Tortuga Finance: Our vision for cross-chain is not as much liquid staking on those other chains, but trying to bring tAPT, our Tortuga stake app, to other chains. When you’re building something like this, you are kind of ignoring the fact that a lot of people have to make their way to Aptos first. When a new chain launches, it’s a whole different set of wallets, way of navigating the ecosystem, and knowing which apps exist. The fact that people know Tortuga exists is probably from extensive time on Twitter. If you don’t spend hours per day or week on Twitter, you wouldn’t know that all these apps exist. We’re excited about the potential of bringing tAPT to other chains. There are people who love Solana and want to be on it, but also want access to tAPT or the staking yield on tAPT. So why can’t we provide that to them on Solana? For us it’s about bringing staked Aptos to other chains. We’re currently doing all of these discussions with teams like LayerZero and Wormhole to explore that. It’s not the same model as, for example, Lido, which is effectively like a franchise. We were talking with some people who propped up Lido in the early days,  and you as a team could essentially apply for taking the Lido brand and the equity associated with that and go bring it to a Solana or another chain. There’s definitely value in that, but we just want to start with Aptos. What we can do is broaden the exposure of such a young ecosystem and make it easier. The main question we’re trying to flip is: what if people don’t have to come to Aptos at all in order to be in the Aptos ecosystem?

Alejo: So two things that came to mind: 1. I’m scared of franchises. I do think that having a more local, decentralized economy is super important. This is one of the debates going on on Ethereum, whether Lido should cap its maximum amount staked because they’re getting so big. I think users should be informed enough to not put all their eggs in one basket. And then, 2. It's super important to have these Aptos primitives on other chains so you can enable things like collateral, stacking of these different DeFi protocols in a way that people can just do it in their home. I’m curious to hear your thoughts on decentralization issues and taking tAPT on other chains.

Tortuga Finance: What we’ve learned is that if any team were to parachute into Aptos and try to build liquid staking, they would be in for a ride. There are a lot of nuances and peculiarities with any chain that you need a team native to that chain that knows the chain really well. I don’t exactly know what the model of execution is for someone like Lido is, but there is the extra burden of having the centric version of Lido and the splinter teams that are associated by name. For execution’s sake, I think there is probably a little bit more friction with Lido’s model. I also think it would be interesting to see if this approach plays out because there’s a little bit of execution difficulty. Our central vision for distributing tAPT is basically outside of gas:, you’re still paying in APT, but why not just use tAPT instead? You can do a one-for-one replacement of pretty much every situation where you use APT except for gas. When you think about cross-chain, that’s a whole lot of work.  It would be a hard uphill battle, but I think it’s a worthy experiment to run because it hasn’t been done before and can help clarify our understanding of how people behave on chain.        

Alejo: That’s exactly it. All that hard work of building the community around usage and other builders that want to integrate with you, it all takes a lot of work. I think that having a core team be a part of this is better execution than just delegating out to other teams. One quick thought that came to mind is you could probably hack or bootstrap that pretty quickly with some form of widget with Liquidswap.

Tortuga Finance: We definitely are interested in making tAPT more accessible to folks.

Alejo: Awesome. Let’s hop into some submitted questions.

1. Tell us why your project is called Tortuga.

Tortuga Finance: So the turtle thing basically came about when we were just batting around names. Eventually someone came across the phrase “It’s turtles all the way down,” which is a reference to the world sitting on this mother turtle and someone asks what the big turtle is sitting on, and the lady leading the lecture says, “It’s turtles all the way down!” And I think liquid staking is a little like that, because you’re sort of just adding this layer on top of the entire chain, but I don’t think we’ll get to the point where it’s just endless layers on everything. But we just decided to go for it because it was a fun name. Tortuga seemed fun. And we thought the turtle emoji was cute. Hence the birth of Turtle Nation.

Alejo: Definitely very memeable, which I think is a huge plus because memeable brands are key to crypto adoption and growing the community around it.

2. How do people ensure that the underlying APT is there and that they’re getting the rewards they’re getting?  

Tortuga Finance: It’s actually all in the protocol. That’s actually a very important point for liquid staking protocols. If you’re deciding to use a liquid staking protocol, choose very carefully. It’s very important to figure out where your rewards are coming from and how you actually claim that. For Tortuga, we obviously give you tAPT. It’s different from something like Lido where you stake ETH and get STE back and then over time, the amount of STE that you have goes up. It’s meant to stay at the same peg, one STE is supposed to be ⅛ of ETH and then you just get more STE over time. That’s how you accrue your rewards.

In Tortuga, it’s flipped. You get the 1 tAPT but then the amount of APT that you can redeem it for from the protocol goes up. So you get the tAPT, and you’ll see this on the Tortuga app itself, there is a tAPT price, and that is the amount of APT you get when you unstake. Go to our Docs, to the Integrated Resources section, where we link out to our protocol, to our governance model, and there you can actually see how much is in the protocol and how much has been staked. It’s complete transparency. You can very quickly do the math on how we get to things. We’re optimizing for trust and transparency with the protocol, so that’s how you know the rewards are actually there.

3. What is Tortuga’s goal? Why are you in the crypto space?

Tortuga Finance: For us, our scope is more narrow than Pontem’s. We’re interested in enabling a different type of DeFi ecosystem to take root. I think that because of all these different primitives that have spawned on different chains over time, the ecosystem looks different because of the path that it took. Liquid staking is, in our opinion, a no-brainer primitive, but what would happen if liquid staking was there from Day 1? That’s the question we’re trying to answer. We want to make sure that because of the Aptos staking nuances, that everyone has access to staking rewards. We also want to make sure that everyone can transact in TF2.

4. What are your thoughts on the Aptos airdrop that you’re thinking about for the potential distribution of your governance token in the future?

Tortuga Finance: Your sentiment that the community is so important is definitely true. On our side, too, the community helped us a ton, even today helping track down bugs. It’s all in the direction of producing a better experience. We’re excited about potential airdrops, but there’s nothing that we can announce right now. Overall, we’ve been a little bit more cryptic about this. One thing that we can say is to stay tuned and follow us on Twitter and Discord because that’s where we’ll be posting stuff.  

Thank you to Tortuga Finance for joining us on our livestream today. It's been super enlightening and we look forward to having them on again!