April 12, 2022

How To Make DeFi And NFT Work Together?

This is a weekly interview bought for you by CoinGecko.

In this episode, they interview Ben Lakoff, Co-Founder of Charged Particles. Lakoff gives you an insight into Charged Particles, a unique protocol that lets you put digital assets inside your NFTs.

This is a 24-minute-long interview. To make it easier to digest the content, I have summarized a couple of important points below.

What is Charged Particle?

Charged Particles is the groundbreaking new protocol that lets you put digital assets inside your NFTs. Now, ordinary NFTs can contain a digital “charge” inside — ERC20, ERC721, or ERC1155 — giving you the unprecedented power to create nested NFTs. If you can digitize it, you can deposit it into your NFTs.

What are the used cases and how can you ‘Charge’ your NFT?

Interest Bearing NFT: Deposit tokens supported by Aave that then get converted to a Token by the protocol into an NFT to create yield-bearing assets.
Nested NFT: Create a brand new asset class known as a Nested NFT. Bring to life a collection of NFTs all housed within one single NFT
Gaming: NFTs are used as in-game items. The power of the in-game item could be dependent on the amount of “charge” the NFT holds.
Gift Boxes: You can create an NFT and use it as a repository for your family members’ growing crypto stash

Full Transcript From This Interview

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Ben Hor: So what is Charged Particle? Yeah, sure.

Ben Lakoff: So Charged Particles is a NFT protocol that allows you to take your NFT give it a smart wallet. So you can deposit other assets inside of that NFT. You can put other fungible tokens like ERC 20s or DeFi interest bearing assets or you can put other non fungible like ERC 721 or 1155. So you picture your NFT as a basket, and you can put things inside of it, then you can timelock that basket. So even though I transfer it or sell it or move it, you can’t pull the things out from that smart wallet.

Ben Hor: Hello, everyone, my name is Ben. And as usual, I am the host of today’s podcast. Today, we have amazing person with an amazing name. His name is Ben Lakoff. Welcome to the show, Ben.

Ben Lakoff: Nice to be here. Ben. Let’s go.

Ben Hor: Yeah. So tell me a little bit about yourself. Right. And before I asked you about yourself, I also would like to know about your favorite NFT. So yeah.

Ben Lakoff: A little bit about myself. I’ve been like American, but I lived outside the US for nine years. So I actually spent four years in Bangkok, so kind of over in your neck of the woods. Background in finance, got involved in crypto in 2016. Angel investing in a Thai crypto exchange, and then kind of started a company in 2017, a trading company that failed when a lot stuck around in crypto, you know, as they say, got further down the rabbit hole, co founded Charged Particles, summer of 2020. It was originally started by my co founder Rob Secord in 2019. And we’ll go into more details on that. But these days spend a lot of time on Charged Particles and do a lot of investing advising in the crypto space. You also asked about favorite NFTs, right. Yep. So I held out on the whole PFP game and kept a nice picture of my face for the longest time. But I’ve switched. So I have a pixel portrait, which is just a custom made pixelated image of yourself, which I just looked like any other white guy. So it was when I got it. It was a yeah, pretty, pretty plain Jane white guy. So that’s my PFP. But I’d say my I’m not going to mention our own but a favorite project that I kind of know and follow closely would be the FLUF ecosystem. So forth world, the bunnies.

Ben Hor: Alright. So you know you mentioned we today’s topic is actually Charged Particle. So what is Charged Particle?

Ben Lakoff: Yeah, sure. So Charged Particles is a NFT protocol that allows you to take your NFT, give it a smart wallet, so you can deposit other assets inside of that NFT. You can put other fungible tokens like ERC 20s or DeFi interest bearing assets, or you can put other non fungibles like ERC 721 or 1155. So you picture your NFT as a basket and you can put things inside of it, then you can time lock that basket. So even though I transfer it or sell it or move it, you can’t pull the things out from that smart wallet, or inside. So like our Twitter handle is DeFi NFT that we got in February 2020. So it’s a very hot space, this intersection of DeFi and NFT. But it’s something we’ve been thinking deeply about for quite some time. Yeah, excited to be here.

Ben Hor: Yeah, you know, one of the examples I can think of that did this is actually Aavegotchi. Is that something similar? Yeah.

Ben Lakoff: So, actually, coder Dan was in Charge Particles Discord, before Aavegotchi, and like talk to Rob and kind of jammed on some ideas on it before starting Aavegotchi. But very much was kind of inspired by Rob’s original vision. That was a nights and weekends project at that point to build out Aavegotchi.

Ben Hor: Cool. And I want to understand a bit of the technical specifics here, right, because it sounds to me a lot like wrapping. Now. How is this bundling function technically achieved?

Ben Lakoff: Yeah, so you’re just taking an NFT and you’re giving it a smart wallet, so that now smart wallet is what contains those assets. So you think of it as like almost a sub wallet, you have your metamask or your ETH address with your NFT. And your NFT then has its own smart wallet, so that like, kind of tiers down. But um, you get to see a lot of really, really cool stuff when kind of like nesting these things inside of each other in a smart wallet, which is in a smart wallet, which is in a smart wallet. So some pretty, pretty cool. It kind of shows the power of like these composable building blocks when when picturing a NFT not just as a beautiful jpg or a piece of art or whatever digital media file you would like. But picturing it as a container, something that’s able to hold other assets in a programmable way, gives you a lot of flexibility in what you can do

Ben Hor: I think the first idea that comes to mind when I hear this is loot boxes for games. Kind of like you know how in Overwatch where you have a box, and then you’re randomly generated skins from it, something like that.

Ben Lakoff: Yeah, 100% Or you think about like, your little virtual avatar with his little NFT backpack running around the metaverse and putting little NFTs into his backpack as it goes along. So this is like the more easy to understand example. But then you have a product that we call vesting capsules. So this is used by founders or investors. So you take your tokens that you would distribute to your investors, typically, you do this in a smart contract that they can pull out at monthly, you can put that inside of the NFT and then give that to them on day one. So they have tokens, they have that NFT with the tokens locked safely inside, they can’t dump on the market, they can transfer to new wallet, they can use it as collateral, they can sell that whole package, before it actually vests, kind of gives you a lot more flexibility. And then from the team’s perspective, you know, you don’t have to worry about distributing monthly, if you’re like you know using disperse app or whatever, you’ve you’ve gotten rid of that on day one, they can’t pull it out, they can’t dump on you, and they have full custody of it from day one.

Ben Hor: Oh, that’s really cool. So just to clarify, it actually vests within the NFT. So a bit unlocks every month, you can program it in.

Ben Lakoff: You can. So we actually don’t have that flexibility, we just do a time period. So you can do a big batch unlocking in six months, a big batch unlocking in nine months, 12 months, and kind of take those sub NFTs and roll them all into one big NFT. So you still have the ability like a linear vesting, that will be a key feature of V3 because there seems to be a bit of demand for this. We’ve had a number of projects, locking founder or investor tokens in an NFT. With Charged Particles, you can still use this beautifully aesthetically pleasing NFT that is a piece of art. It just happens to be that capsule that deliverable for the founder or investor tokens themselves.

Ben Hor: Oh, that’s really cool. So just to clarify, it actually vests within the NFT. So a bit unlocks every month, you can program it in. I mean, that’s really cool. I can imagine how useful for me for new projects, distributing tokens. And on that point, I’m actually curious, beyond founders using it for this specific purpose. Do you have any other kinds of users, for example, individuals like myself, and what use cases do you see? Can you give some other examples?

Ben Lakoff: Yeah, yeah. So that’s just the like vesting capsule product. So our art Dapp has been live for over a year now, also in Polygon. So we have had quite a bit of like art experimentation. So one NFT with multiple NFTs nested inside all from different artists. An artist group called The Guild did one long ago that I forget how much it sold for at this point, but you know, nearly $100,000. It’s this really cool idea of having all of these artists collaborate, nest all of them into one NFT and deliver the whole NFT. Actually, we did a giveaway at NFT NYC like a treasure chest for partner tokens or fungible and non all locked into an NFT given away in time lock. So you know, they can pull it up, pull it out and sell it right away. So these are some of the use cases that are live. So with Charged Particles in NFT protocol, so NFT agnostic, any type of NFT. So we’ve separated into guilds, each guild kind of focusing on a different niche within the NFT world. So there’s a music guild. We have unchained music that’s actually closing out their seed round right now built on top of Charged Particles using NFTs as like this accounting ledger of who, whose money goes where, you know, visually represented by an NFT. We have the gaming guild, so different groups of people kind of experimenting around with different use cases, you know, like Aavegotchi, you have this, this basket and growing in interest or stuffed full of other fungible or non fungible tokens. This has gaming written all over it. So a number of different projects being sprung up book of alchemy is one of them, that has done multiple successful NFT drops and is building out an entire ecosystem with very rich lore around this book of alchemy. It’s really, really cool, all centered from Charged Particles. And then, of course, we have like a number of other guilds, ecology, charity, fashion, visual arts, development, collectors, guilds, these are kind of the ones that round out the whole, the whole ecosystem, but I talked forever, obviously, very passionate about the music and gaming ones, these, all of them are really, really cool. I don’t have favorites.

Ben Hor: When you mentioned guilds, are they actually part of the DAO or they are little communities that people just form naturally?

Ben Hor: Can you explain what Charged Particle token does?

Ben Lakoff: Yeah, so Charged Particles token is IONX, I O N X. And it is a governance token. So we have a governance forum at gov dot, charge that fi and then snapshot voting. And this is to control key decisions of the protocol. We do believe in progressive decentralization. So we’re very much a team of 16 that’s working full time that’s shipping and delivering and we have daily stand ups and all of the things but eventually, you know more and more control and decision making will be in the hands of the governance token holders as we move on this site, progressive decentralization path.

Ben Hor: Are there any interesting statistics that you can share about the protocol?

Ben Lakoff: Man, I should have come prepared with those yes. No, in terms of like, I mean, so we, our Dapp went live over a year ago we went live on Polygon in June, or July last year. A number of NFTs minted so we have a full minting station and marketplace kind of built out as this is all proof of concept of like what can happen with these, like energized Charged Particles, these NFTs holding other assets. We’ve had over $3 million in NFT sales that numbers probably outdated at this point. But like some of the some of the more interesting stats, there’s Paragon’s DAO launched, they locked $23 million worth of founder tokens inside of Charged Particles in NFTs using these vesting capsules. And then now like fractal and there’s a couple other ones that will do that as well. So those those numbers are quite significant when when you’re thinking about founder tokens being locked in these NFTs. So those would be kind of the most interesting stats right now. There’s definitely some charity and giving back stats that I should know off the top of my head. But um, we go live with our protocol V2 in the next couple of weeks, which has a number of really, really interesting updates. One of which leads into the charity that you can actually direct a stream, a portion of your interest generated in your income, are generated in your NFT to another wallet. So what this could look like is you have an NFT stuffed full of interest bearing assets and you pledge a portion of that interest into a charity or into another wallet of your choice. But this is, you know, kind of a little feature that will be quite useful for gaming in the way that we’re thinking about it with some of these things as well.

Ben Hor: Okay, you mentioned a lot about charging, right, and I guess it’s a term that the team uses. And I want to understand a little bit more about what are the implications of charging, you know, from the perspective of other contract functions? For example, quite technically, bypass authority sales NFTs held inside if I sold the charged NFT.

Ben Lakoff: Yeah, 100%. And this is like, I mean, so in my blog post about vesting capsules, you know, I said, create a piece of art stuffed it up full of investor tokens, give them to your investors, it’s still a normal NFT that you can buy, sell trade on OpenSea or whatever. But I mean, that thing is clearly a security. So OpenSea would probably ban it, because it has a value locked inside. So we’re really shaking up the idea of what is an NFT? What is a financial instrument, injecting financial instruments into your NFT, it’s kind of really blurring this line, for sure. But we’re an open NFT protocol. So people can put these composable building blocks together in ways that resonates well with them that helps support their ecosystem. So we support a lot of different things. And I mean, I would encourage anybody listening to jump into our Discord and contribute, there’s a lot of really, really cool ideas and people kind of building and tinkering with Charged Particles. And that’s with the Dapp as it is. So in the next four months or so we’ll have our API and SDK and then I mean, talk about true composability being able to like take what we’ve built in and truly start moving towards this NFT protocol that’s really everywhere, allowing any and all NFTs to hold a charge, hold another token inside.

Ben Hor: Can you mint NFTs on the platform directly?

Ben Lakoff: You can, so we have a minting station. It’s live on Polygon and ETH. Oh, and everything on a platform right now is zero fees. So free to mint and free to sell. You do pay gas. So we’re on a Polygon, you can exercise your true creativity there. That’s for sure. And then, yeah, it’s 0%. The fees are set at zero for deposits and withdrawals of assets inside. So all of these things are set at zero. Now, as we like continue to getting more a little bit more traction.

Ben Hor: Are there any plans to move to other chains?

Ben Hor: And I suppose this is for 2022 alone for the plans?

Ben Lakoff: There are for sure. I mean, dev resources are pretty scarce these days. So and we’re working pretty darn hard on pushing out protocol V2, which goes out soon. Then V3, we have NFT, liquidity mining, and then we have our API SDK. So these are kind of the like, big, big milestones. But after or perhaps in parallel to a few of those later ones, looking into other EVM compatible chains is definitely on the roadmap as well.Yes, correct. So we’ve we’ve built up the team over the last six months. So we finally have, we’ve always had a really good team, but we’ve actually got the actual manpower to do these things. So 2022 is going to be a big year from a development standpoint, and really moving towards that NFT protocol vision that we want.

Ben Hor: Great. And I think we’ve covered through our questions quite quickly and I just want to kind of run off what is Particlon right because this is a new project being organized by Charged Particle itself.

Ben Lakoff: Yeah, it is. So Particlon is the first generative NFT drop by Charged Particles. So in last year, we sold some leptons which are yield multiplying NFTs. They will go live with our liquidity mining. And this Particlon is a PFP project that’s built on our proton contract so every NFT will be filled with another ERC 20 token in the random amount that will be redeemable for a future weapon. They come like battle-ready, we’ve got this whole battle planned with them. And then the group we’re working with Vaizey the idea of having this Particlon NFT as an access token to get into a lot of these real world events. We believe that we’re kind of blurring the two lines, you know, you can battle and speculate within your NFT from day one, and then you also have the ability to use this in real life as part of your tribe. In these IRL meetups, so it’s a pretty cool blend of the two. And aesthetically, it’s gonna look freaking awesome. Like, this thing’s really coming along.

Ben Hor: When you say battle, do you mean it’s on-chain game?

Ben Lakoff: Yeah, yeah. So cool. Everybody, I mean, our just our gaming guild popping off, like it’s Charged Particles protocol has tons and tons of gaming abilities like using this as the building block to build different play to earn games or battles or whatever. So we’ve always been, you know, encouraging development of these sorts of things and ideating and helping so now we’ll have a PFP project that is the poster child for all of these crazy charged particles experiments. And yeah, it’s super fun ideating on these things, and just the power of having an NFT as a basket holding other things, those things equating to something within the game. And I don’t want to alphalete too much about all of the dreams that we’re dreaming up with this. But um, yeah, I mean, Particlon will be the poster child that we can push through all of these crazy things, and build out these fun little site adventures that serve as an example of what’s possible with Charged Particles. And, you know, as soon as we have the API SDK, people can run with this and like, build on these crazy little use cases that we’re using Particlon as an example use case.

Ben Hor: Great. Well, then, I guess, you know we went through our questions pretty quickly. Is there anything else you’d like to add or share with our viewers? Before I…

Ben Lakoff: I’m, yeah, I mean, presumably, you’ll tag me Charged Particles, Particlons on Twitter, which is probably the easiest way. At Charged Particles we’re hiring. So we’re looking for a UI UX and full stack developer, but always to kind of encourage anybody that’s interested, passionate to reach out, and we’ll see if there’s some interesting way we can work together. But um, now we’re super excited about 2022 and beyond and Particlon is going to be super super awesome. That will be at the end of March. And yeah, watch this space.

Ben Hor: Thanks so much Ben. Good to have you.

Ben Lakoff: Yeah Ben, enjoyed it. Thank you sir.