AMA Highlights – Constellation
By Daniel Dal Bello, Director.
October 8, 2020 – 12 min read.
On Tuesday 6 October, we welcomed Ben Jorgensen and Mathias Goldmann from Constellation into the Hillrise Capital Telegram chat for an AMA. Ben is the current CEO and Mathias the COO, both are cofounders. Unfortunately Mathias was unable to join us for the event on the day.
Constellation’s network uses the well-known and lesser utilized DAG architecture for their ‘Hypergraph’ protocol with a unique consensus mechanism, Proof of Reputable Observations. The team are making their entrance into the growing DeFi market with Lattice Exchange, which stands to be the first major application built atop Constellation’s network.
In this post, we have compiled key questions and answers from our AMA event.
Daniel Dal Bello
Thanks for joining us Ben, we have been looking at organizing this on and off for a few months now!
Today we are keen to focus on the Lattice Exchange more so than Constellation because this is a significant development of late in the ecosystem. So, from what I’ve read this is your play into the DeFi world, however it is separate from Constellation Network.
I’ve seen that you’ve raised funds to support this project from FBG Capital and Alphabit Fund. It’s also of interest as this stands to be the first major application built on top of the Hypergraph Network – which is a big deal, congratulations.
Can you talk to us about what the Lattice Exchange is, what the relationship is exactly to Constellation and how you position yourselves among the growing numbers of DeFi products and exchanges in the market?
Thank you all for hosting us, great to meet you all and be a part of this community. My name is Ben Jorgensen and I am the CEO of Constellation Network – the base layer-1 protocol that Lattice Exchange is going to be built off of.
Let’s dive in. So the goal with Constellation was to provide an ecosystem where Web 3.0 businesses could be built on top of. Our focus from the beginning was to enable developers to build on a decentralized platform and merge Web 2.0 applications with this decentralized and tokenized Web 3.0.
As such, Lattice is the first application that is to be built on the base layer protocol – Constellation’s Hypergraph. We wanted to provide the first “Hello world” application for people to have a framework to build off of.
The DeFi space is rather crowded right now as many of the solutions are band aids on a faulty infrastructure. As such a lot of projects are presenting solutions that are rather simple but come off complex. Our focus is to create Lattice – an aggregation of many projects in DeFi but to be built on Constellation’s base layer protocol.
“The DeFi space is rather crowded right now as many of the solutions are band aids on a faulty infrastructure.”
One of the key advantages to building on Constellation was that we have a “feeless” ecosystem – which allows anyone to incorporate a flexible economic model and application on top of it.
“We actually have one of the largest institutions in crypto backing us (which we haven’t mentioned).” – Will you be announcing this today?
We aim to announce this next week as a few more institutional backers have come on board just this week. There is a huge appetite to see the DeFi market expand into traditional securities markets. Additionally, there are few projects out there that have already built crypto-related businesses and understand the facets of a crypto business. I will say that one of the backers is [one of the] the largest liquidity makers in the industry.
Hello Benjamin, why did you guys choose to go for another token?
We chose another token because the Ethereum ecosystem is a great on and off-ramp. We wanted to capture liquidity and trading where volume is being created.
Hey Ben, great to see the developments with Lattice and also great to see your AMA on Hillrise!
Do you expect Lattice to also integrate with your current work with the DoD (Department of Defence) and other partners?
Great question. Our work with the federal space is somewhat isolated as it is a separate ecosystem built on Constellation. It is a completely different use case and different model altogether. Lattice is essentially the financial application built on the Constellation ecosystem. This is another use case and really highlights the technological and economical strengths of Constellation.
Yes, feeless ecosystem sound nice, can you discuss other competitive advantages you see with Lattice Exchange?
Our MVP (which we internally call ‘Phase 1’) is to create a competitive project to 1inch and Uniswap. Uniswap has a nice UI and user experience – we want to keep that trend going and make it rather easy for users to work with Lattice. Our MVP will aggregate liquidity pools and introduce multiple AMM’s that are coin specific. Our MVP is scheduled to be released before the end of the year and we already have a completely new engineering team building it out.
Our MVP is to establish ourself in the market with a product that people know how to use and understand. In Phase 2 – we will being introducing trade settlements on DAG. Because of DAG’s feeless structure we can incentivize volume trading by working with near-zero transaction fees. This is going to be a huge leap in the DeFi and crypto space as we aim to provide cross chain liquidity between DAG and ETH – allowing DAG holders to stake DAG and earn LTX rewards.
“This is going to be a huge leap in the DeFi and crypto space as we aim to provide cross chain liquidity between DAG and ETH – allowing DAG holders to stake DAG and earn LTX rewards.”
Daniel Dal Bello
I’m always curious – aside from the exchange product itself – to know how you plan to attract users. This is compounded by the fact that this is the first big app on your network so from my perspective there is a lot riding on the success of Lattice. What’s the strategy to bring active users to the exchange?
Great question – the aim is to set a foundation and flag in the ETH ecosystem (hence LTX is an ERC-20 token). This will allow us to easily aggregate liquidity pools and work where capital exists. The business competitive edge will attract more traders as well as a B2B angle with Lattice where we work with exchanges to capture cross-flow (market trades that are routed to DEX’s) and use Constellation’s Hypergraph because it is faster, cheaper, and built to scale.
Daniel Dal Bello
Just wanted to build on this Ben and especially as you mention working where the capital exists (important point). The documentation for the exchange highlights that a large portion of the LTX tokens minted will be dedicated to liquidity mining. Seeing how this has gone for some of the projects that want to attract users through token incentives. How will you tackle and balance the liquidity farming approach?
In our MVP pools will work on ERC20 like we are used to. The difference is that we also allow for weighted pools and multi asset pools. We have our own pools and we aggregate existing pools leveraging the liquidity through smart routing – which ensures that a trader gets the best price at the lowest slippage.
With DAG we have created very powerful governance and explore really deep topics with our community. This is essential to Constellation’s success now and in the future. LTX – as a governance token – will also play an essential role into bridging the DAG ecosystem and ETH ecosystem. We are exploring some rather advanced ideas on how to incorporate LTX into our reputation-based consensus model and LTX and the governance of it will play a role in how settlements occur. I can’t divulge more now.
Thank you for joining us here today! You mention in the whitepaper of Lattice exchange that the exchange will allow for the use of advanced AMM algorithms for both liquidity providers and users.
Can you share some more about these algorithms and how they give the exchange an edge?
Our goal over the course of the next year is to introduce more advanced and complex AMM’s – methodologies and data science that is used in the hedge fund world.
Right now, smart contracts can only handle simple numeric values. With Lattice and through Constellation’s ecosystem, we will be able to cryptographically secure more complex data structures. Constellation set out to cryptographically secure data pipelines – oracles of data and measuring the veracity of data.
How this transcribes into DeFi – ‘oracalizing’ data that can be used to create complex trade algorithms. In a 3-5 year vision this will become a marketplace of oracalized and validated data (external data sources as well) that can be blended to create advanced trade algorithms – like those seen in practice in traditional securities trading and strategies.
From a user perspective, how do you envision the experience of using Lattice? Today many traders access Uniswap by connecting via MetaMask all within their browser, will Lattice have a similar plugin for browsers or would it be used from within a wallet?
Thanks Joey. In the next couple of weeks, Constellation will be releasing a MetaMask-like wallet. This will be a more friendly addition to the Constellation ecosystem and will play nicely into the Lattice vision. One of the things we love about Uniswap is how user friendly it is. Constellation isn’t user friendly today, but soon it will be more inviting for retail! Very excited about this new support and how Constellation weaves into Lattice.
As you are now both working in executive positions within the Lattice team, do you expect this to impact your focus on Constellation?
I’m also very keen to know if there are any other additions for the DAG ecosystem coming up.
I was talking with Frank (our lead software engineer) about this today. Lattice is like the Excel on Microsoft. Constellation is like an operating system that you can build on top of. In order to understand how an operating system works, you need to have some prime examples so that it sparks people’s creativity. Microsoft has a suite of applications and tools and then developers build new applications and programs on top of this.
Lattice makes Constellation easier to understand and drives the vision overall. I will admit that it is a lot of work to build multiple businesses – but hey, this ain’t my first rodeo. This is fun and working on the application layer-2 level helps the ‘productization’ of Constellation.
Great question Ray, also curious how your impact on Constellation will be impacted especially considering your other endeavor, MZ Dining Group.
Ya. But I am not the chef. I leave that to Chef Zimmerman. In 2015, I started a search fund to a) see if I am a good leader and entrepreneur by investing in other businesses, b) did I have a strong network, and c) what was the next big thing?
I randomly got into fine dining as I love creativity and nuances of alternative businesses. My first restaurant investment I helped raise capital for and they got 2 Michelin stars their first year, top 50 restaurants in the world and 3 Michelin restaurants their second year.
I then met Chef Marc with MZ Dining Group and helped him expand his vision. He is the artist in that business. It is a rather different business with about 35 people on staff – we aren’t in the business building stage anymore. My time is with Constellation and Lattice. Food and dining is a completely different beast. With incredibly savvy and creative people as business partners – you can do anything. They cover my back when I am busy. When you have A-list founders, you can do so much more. I am not the bottleneck.
A major reservation I have been having about crypto exchanges, DeFi etc., is the ability to hold people accountable should things go wrong. What is being done to make assets more secure? Should systems fail, what policies would mitigate loss and what ability or plan does this exchange have to be held responsible?
Ahhh. I love this – programmatic assurance and compliance is what I call this. The joys of coding is that you can program assurance and compliance. I think you run into a lot of issues if the core infrastructure is not scalable. What happens if it breaks?
This is why we have taken our time to build Constellation and ensure that it scales. We even run concurrent consensus so that transaction speeds and security can scale:
1. For block validation, and
2. For the global state of the network
LTX can play a role in #2.
One of the drawbacks of [the] EVM and Solidity is that there is very little in the way of developer support and quality assurance – this was the same issue in IOTA. We don’t release anything unless we think real world developers would naturally use this in their application and stack. This means a lot of testing.
Constellation is truly decentralized, if the network goes down, any two endpoints could connect and transact. Centralized mainnets (Masternodes) have this problem with going down – we took extra long to make sure we were truly decentralized so as to avoid this.
“Constellation is truly decentralized, if the network goes down, any two endpoints could connect and transact.”