Alexander Wilke joins us to discuss on how Pendulum is the missing link between Fiat and DeFi.
Alex is an entrepreneur and operations executive with more than 18 years industry experience, leading technical and business teams. Prior to SatoshiPay, Alex was an entrepreneur and operations executive leading technical and business teams focusing on payments, mobile and business intelligence. Back in 2013 Alex already started researching Bitcoin and the emerging blockchain industry.
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The following transcript was created using artificial intelligence. There will be some grammatical errors below.
00:00:17:17 – 00:00:32:27
Richard Carthon: Hello everyone. Welcome to another episode of Crypto Currant, your host here, Richard Carthon. And today I got a very special guest for you all the way out in Berlin, working on a really cool layer one platform called a Pendulum. We have Alex, the co-founder of Pendulum. How are you doing today?
00:00:34:12 – 00:00:44:10
Alexander Wilke: Thanks for having me. Hi, Richard. Great to meet everyone. And, yeah, I’m. I’m great. We’re a short before launch. Exciting times ahead for us.
00:00:44:27 – 00:00:52:05
Richard Carthon: Definitely. And excited to learn more about all the things that you are building. But before we do that, let’s learn more about you. Can you give us some background on yourself?
00:00:53:09 – 00:00:55:21
Alexander Wilke: Yes. So I joined
00:00:57:06 – 00:01:28:10
Alexander Wilke: the blockchain company behind Pendulum is the first you pay in 2016. So I already have some experience in the crypto space. So. UPS and downs. And so we decided to build. And along the last year also I was experiencing myself a little bit with Bitcoin back in 2013. I find it’s an awesome technology. It’s a centralized financial building and a decentralized financial system. It’s absolutely from the first point I would say.
00:01:28:17 – 00:01:51:08
Alexander Wilke: So from the first time, and I’m really excited to be in that area. Before that, I was doing producing and project management, technical product management in the startup scene here in Berlin. And yeah, that’s quite some experience here working with teams. But the blockchain space is where my my heart beats most in Germany.
00:01:51:27 – 00:02:21:03
Richard Carthon: Yeah. That’s awesome, man. So been in the space first time about in 2013. So almost a decade later, which is pretty awesome. Started working back in 2016. And as you’ve seen the market mature go through both bull and bear cycles. What was it about Pendulum that that made you all want to create that? So tell us about what is pendulum and and what made you all want to go and solve whatever challenge that you were looking at?
00:02:21:24 – 00:02:53:22
Alexander Wilke: Yes. So I was working with blockchain early on and my founder, a co-founder mine, we always wanted to create something that has mass adoption, something for the real world user, and to bring that innovation that we saw in blockchain to the users. We started with a micropayments system based on Bitcoin. Initially, there were not much blockchains out at that time, so the choice was really limited.
00:02:54:02 – 00:03:31:20
Alexander Wilke: And we yeah, we, we saw Bitcoin then growing to a, to a face where it was not really usable for us as it for, as a payment platform. It just got too much traction. Right. So the blocks, the blocks were full and our micropayment system had trouble connecting to it. So we switched back. Then we switched blockchains to the center blockchain and we’re creating a product based on the center blockchain. We also built a international payment platform for businesses at that time as publishers and to choose subscription models, payment models.
00:03:32:02 – 00:04:11:05
Alexander Wilke: At that time we looked for a new business opportunity and international payments where already the number one use case on blockchain saw people sending bitcoins around from one point in the world to another. That was already a thing. Stablecoins. They got initial traction already and we built a complete set of payments. So a international payment platform for businesses on the blockchain and growing that we were missing some features or we had to interact with a lot of partners, security providers and also market makers and more parties came into the table.
00:04:11:11 – 00:04:48:13
Alexander Wilke: They all were very hesitant to work actually with blockchain coming from the traditional finance world, and it was very difficult to expand and to scale with these partners. At the same time, we got all the defi innovation coming in. So last year this stuff really traction automated market makers where in the game and also we saw a lot of liquidity and use cases coming to this area on other blockchains that had smart contracts. Unfortunately the blockchain we were on the set of blockchain did not have any smart contracts, so we can automate that on the blockchain.
00:04:49:02 – 00:05:22:22
Alexander Wilke: The pain working with all these intermediaries at the same time, it was, we thought, all right, before we switched blockchains again and then don’t see the right fit. We’re now building it ourselves, and not only for ourselves, but for everyone who wants to deal with international payments and for us in in the blockchain space. So we built a custom blockchain for this use case. And it’s not, of course, limited to our own usage, but for it is open for everyone to build on and use it of course, also.
00:05:22:24 – 00:05:39:06
Alexander Wilke: So that was a great let’s say we get we go one level deeper now from the application level now to the blockchain level. And we picked Polkadot as our ecosystem for various reasons. And that’s how a pendulum was born last year.
00:05:39:29 – 00:06:12:20
Richard Carthon: Yeah. Thank you for walking us through that. It’s really interesting to hear how you could be working with a couple of different platforms, identify some challenges and realize like, okay, we could just go to another ecosystem and use their framework. Or we could just build it ourselves. And you just chose the latter as opposed to build it yourselves. So now that you’ve been going through this building out a system for international payments, one of the things that that pendulum talks about is missing link between Fiat and Defi. You kind of talked to us about like the composable Fiat chain and like the polkadot chain that you are working with.
00:06:15:01 – 00:06:46:02
Alexander Wilke: Yes. So the idea is that we have a blockchain, we have a lot of stablecoins. On that vein, on pendulum and also smart contracts that we can automate a lot of the journey of an international money transfer rights. We couldn’t find that on any other blockchain. That’s why we actually decided to build it for pendulum. And it is important for various reasons also because why we chose Polkadot actually has our ecosystem.
00:06:46:04 – 00:07:47:07
Alexander Wilke: So first maybe let’s talk about why we went for it. We were initially a little hesitant because it was back then it was pretty expensive to join the network and there was this initial hype around Polkadot and I think the first parachain you had to, I don’t know, raise a billion and crowd on to to get a slot. So that was crazy times. And we thought, oh, right, maybe. I mean, it’s really good tech. It has this shared security aspect because if we just go there and create a layer one for businesses and maybe even for some fintechs to use, we need a lot of trust, right? So how can they trust us from day one and put their money in and their security? So with Polkadot, we have the relation, which itself is pretty much decentralized and also secured, or let’s say by billions of dollars that are on there, right? So if there is a security issue that would have been found already.
00:07:47:09 – 00:08:25:20
Alexander Wilke: So this relates and secures also all the parachain, including pendulum. So you don’t actually need to trust the pendulum itself from day one. You just need to trust Polkadot. And with that you have all the core, let’s say, features and security features already handled, which is awesome for us again. So we don’t need to open up a whole decentralized validator network that’s all existing already on the Polkadot level. So a big major reason for us, especially for our use case use case to choose Polkadot there a second one was the tech and the smart contracts.
00:08:25:22 – 00:09:09:06
Alexander Wilke: So smart contracts, they are based on the different technical implementation. So these are webassembly smart contracts, not the Ethereum, even based smart contracts. And we did some testing and some smart contracts so that that you create on the substrate a framework on polkadot that are much more performant and efficient than in the IBM system. So that was one reason also coming from the technical side of things. And also there is a tool set ready on Polkadot where you can reuse certain pallets and you can actually plug in and build your blockchain not from scratch but already on shoulders of giants, let’s say.
00:09:09:08 – 00:09:21:04
Alexander Wilke: So you don’t need to reinvent the wheel, which makes it much faster to build a blockchain. Yeah, that’s, that’s, that’s the main reason from the technical point of view. And
00:09:23:09 – 00:10:01:23
Alexander Wilke: yeah, the, the challenges we’re facing connecting than Fiat and fiat users also to pendulum is a big challenge and user experience, I would say. So we are connecting and we are into operating with the banking system in certain areas. We also have these stablecoins of these geographies on the pendulum chain as stablecoins. So we are not only working with US dollar tokens, you see US or euro tokens, we also have Mexican pesos tokens, for example, the Brazilian real tokens or Canadian dollar tokens or British pound tokens.
00:10:01:25 – 00:10:41:21
Alexander Wilke: So we have a lot more variety there. And in this way we can service the journey of a cross-border transfer. And one key element that we implemented is our decentralized exchange, which is specialized on currency exchanges, especially stablecoin swaps. And with this we have an innovative solution there that can execute swaps much more efficiently than in the traditional world or with the classic market making solution. So we can have a very low slippage with some basis points only where people in the traditional world, a two or 3% to their banks.
00:10:42:16 – 00:11:06:12
Richard Carthon: So it’s pretty impressive. And it almost sounds like you made a forex, a foreign exchange marketplace between all of these different stablecoins with what’s within your market, which is really cool. And I want to go back and spend some time like a second, but you brought up something that I can’t glance over that I think is really critical here. I think you had to go in and fundraise some some money and you actually set a world record. Can you kind of talk about that for a second?
00:11:07:25 – 00:11:41:29
Alexander Wilke: Yes. So it’s back in December. I mean, this video is recorded. So we have a look about the time a little bit. It was recorded a little earlier. We just before Christmas, actually, we joined a parachain auction. That’s a crowd loan mechanic. How you secure your slot to the relation to the Polkadot relay chain. And we prepared a lot across a launch at night. And then when we where it was a little bit delayed and then in the morning we were all in the cold also with the whole team launching it.
00:11:42:18 – 00:12:15:25
Alexander Wilke: And, and we just launched and saw a lot of activity happening. And after 3 minutes this crowd was already reaching its cap. So we kept it at a higher cap. Actually, that was necessary because we wanted to include a lot of community on that crowd alone. But anyway, after 3 minutes, the cap was hit, was reached. And actually with this hitting, we also won the crowd alone. The winner was chosen a week after and that was a big success.
00:12:15:27 – 00:12:39:06
Alexander Wilke: And our founder by night, he did some research and actually found out that there was no parachain before that reached that cap and that amount of time. So yeah, we hit a record over there and yeah, I got a lot of support and actually it was very supportive and motivating also that we got this feedback and from a crowd long from the community, which feels great.
00:12:39:24 – 00:13:04:10
Richard Carthon: Oh definitely. I mean if you have the buy in from your community to be able to fill that up in 3 minutes, that they’re in a bear market, especially the bear market that was 2022. I think that alone speaks volumes. So so speaking to that, there is a lot of excitement around your upcoming launch this this February. So just everyone listening, this is previously recorded, but by the time this goes out, it will be around the launch. So can you talk to us a little bit about that?
00:13:05:04 – 00:13:44:13
Alexander Wilke: Yes. So we are currently still working for the launch. There are various topics and fields, of course, before such a launch and that we are tackling. We will also pre launch some of the software on our sister chain on the network, which is the sister network of Polkadot for testing. This project is called Amplitude. So that will be some of the software be already out there. So what we are launching is, is of course the main chain, the core blockchain, and on top there will be the the space walk, which is our bridge to stellar.
00:13:44:15 – 00:14:23:27
Alexander Wilke: So the set on network has some really valuable stablecoins there and it’s a great network also focusing on the whole international payment space and you will be able to use all the stellar stablecoins which are all fiat backed. So there are very nice quality stablecoins so there will be able to use them also on Pendulum, which is great. We will have the widest choice of of stablecoin currencies over there. So this is launching two. And then the third protocol, let’s say our first native protocol, it’s an incubator protect its independence of and along it’s called zero ember.
00:14:24:06 – 00:14:55:08
Alexander Wilke: And this is the forex dex actually. So the the foreign exchange decentralized, the decentralized exchange specialized on forex and that will launch too. There will be some initial programs for providing liquidity. So it will be very interesting times. I guess it’s definitely worth looking at what’s launching because there will be a lot of incentives initially for first users to to provide liquidity, to use the platform and to do the first steps together with them and the whole team.
00:14:55:10 – 00:15:06:14
Alexander Wilke: So yeah, I would say keep an eye out on all the announcements there. We usually tweet everything that’s that’s very relevant. So to do that, it’s probably worth it.
00:15:07:05 – 00:15:27:07
Richard Carthon: Definitely. So get involved with the community. What are ways that people can come and find you? So obviously they can go to your website, which is pendulum chain dot org. What are other ways that people can engage after listening to this right now they’re like, I’ve been looking for some sort of foreign and forex and crypto opportunity and this, this sounds like it. How can they get involved?
00:15:28:09 – 00:16:04:00
Alexander Wilke: Yeah. I mean, start with the website and all the channels you want to join. So join our telegram channel. And it’s pretty active. Also, the discord is very nice. If you want to follow some news, I would recommend Twitter. So on all of these channels, we’re active. We also have a newsletter out where you can subscribe on. And if you really want to strategically, let’s say, contribute or you’re a developer and want to build something with all the tools that are already there, you want to build something for businesses and reach out to our community team there.
00:16:04:02 – 00:16:19:08
Alexander Wilke: They will direct you to the right place to talk also to our product and development team. So we’re very open here and we are looking for four additional builders and users trying to help the community. And yeah, looking forward to meeting all of you.
00:16:20:17 – 00:16:44:27
Richard Carthon: Definitely. Now I just want to go back for a second because I want to spend a little bit more time around the security piece. So there is a lot of challenges that came out of 2022. A lot of it had to do with multiparty liquidity in and also around security. There’s a ton of hacks that occurred. What are you all doing to help learn and prevent the lessons of 2022?
00:16:46:06 – 00:17:29:03
Alexander Wilke: Yeah. So looking at 2022, there, there, I think it was a real a real test of the blockchain space in terms of security. And I see already a lot of advancements and improvements on that side actually. So I think there is another understanding now of trusting centralized entities, so centralized exchanges and so on. So I think that you saw your coins where you hold your own keys and so on, got a lot more attention now again, and we really think that’s a self custodial platform is the way to go.
00:17:29:05 – 00:18:01:20
Alexander Wilke: And it’s a very secure, it’s safe, fundamental method that we can only advise to follow. So in the space, we want also to build a system and an end to self custodial solution also for businesses that they can actually use. That’s not too complicated for them, right? So there are solutions out there for managing and handling private keys and also having a good UX while doing that. And we want to bring that together and make it usable for business users.
00:18:01:27 – 00:18:38:08
Alexander Wilke: But on the cost side, I mean, I touched already on the on the patrol relay chain security that we already got on the core and what we did with our bridge, because I think every second or third tech was the bridge, right? Because they are accumulating a lot of liquidity and is a big honeypot that you want to hack. Right. So if there is something in the smart contract that’s can be attacked, it will be attacked. So we thought of the concept of a security concept for our celebrate and a space where it’s not only a bridge to terror, but also to similar blockchains.
00:18:38:10 – 00:19:13:24
Alexander Wilke: So spacewalk is from the concept more decentralized than other bridge. Just so there is a fully collateralized piece that’s actually safe to say, the assets that are transferred and these collateral tokens, they will be not central, restored or protected by a multi-signature wallet of some kind, but they are actually built up in decentralized vaults so everyone can actually become a vault operator and accepting these collateral payments.
00:19:13:26 – 00:19:42:26
Alexander Wilke: So it’s it’s much more decentralized from the initial concept, which makes it more secure and as a total system. Right. So having this in a and acting or executing a bridge in this more trustless environment is our contribution or our way to go and how we see going the security developments also going forward. I think we’ve seen a lot of missing
00:19:44:12 – 00:20:25:15
Alexander Wilke: money or so in the last year or so, just some balance sheets where I don’t know, some some money got lost. This cannot happen if you put it on a smart contract on the public blockchain, right? So I think this is the form of transparency that can also protect users from losing money. And this is the way we want equity, how money is moved in the future, and a fully transparent 24 seven audited by the public right systems and not someone has actually the right to to steal that money or run away with it.
00:20:26:09 – 00:20:46:01
Alexander Wilke: So if this is secured by a computer, it’s it’s much safer I would say. Anyway. Yeah, that that’s our take on it. So there are various aspects of the whole journey and I think we’re definitely advocating a way of a more decentralized and transparent approach.
00:20:46:19 – 00:21:34:10
Richard Carthon: And I think that’s great. And I think those are two things that are going to be really crucial when things are truly all put on the Blockchain’s Public Ledger. People can go and verify, you can verify and validate, and you don’t have to necessarily trust a centralized entity to take care and hope they’re not lying to you because unfortunately, we we learn there’s a lot of liars out there. And now as we move forward, if if we can put more things into computers and being a lot more decentralized and and having it be in a secure place, that people can control themselves and be on a trusted protocol, I think that’s going to continue to build trust because we have to I think 2023 is about building trust again, because unfortunately, a lot of trust was lost last year.
00:21:34:12 – 00:21:58:20
Richard Carthon: So it sounds like you are on the right path to do that. And I’m excited to learn more about everything that you’ll have going on at Pendulum. But as we wrap up, you always like to finish with a couple of fun questions. The first being. If you could take all the lessons and information that you’ve learned through the years of being in this space and go back to yourself in 2016 when you first started or a couple of lessons you would tell and teach yourself.
00:22:01:27 – 00:22:05:09
Alexander Wilke: Interesting. Actual 16.
00:22:07:18 – 00:22:12:20
Alexander Wilke: So yeah, I still had in 2016.
00:22:14:10 – 00:22:49:03
Alexander Wilke: It’s an interesting one, but I was still because mass adoption was I was widely connected to the adoption of bigger institutions actually, so that bigger companies and bigger institutions are adopting blockchain and looking a couple of years in the space and seeing also the speed. These institutions are moving things forward. I think we don’t we might not necessarily need these big institutions to link to move or migrate actually their traditional use cases or something to blockchain.
00:22:49:05 – 00:23:23:28
Alexander Wilke: I think it’s much more probable that in parallel there will be a system built up without these institutions. And one point there is enough traction these institutions might move over. So in terms of speed and adoption, I think the main driver will not be bigger institutions or especially financial institutions, but it will be the actual users will be the actual disruptors and taking out and automating the way some intermediaries there is actually the way how this will create mass adoption.
00:23:24:00 – 00:23:57:23
Alexander Wilke: So that’s one of the bigger lessons and also strategic decisions that we took also in the company. So initially, of course, we were invited to a lot of like bigger car companies, banks and so on. Everyone’s every meeting started with what’s blockchain. And then after a while we saw that these projects, it might be a proof of concept here or there, but it’s actually moving too slow. And that’s why we went on for more speed with direct user targeting.
00:23:58:08 – 00:24:02:27
Alexander Wilke: Now that’s exciting. But the main takeaway there.
00:24:03:11 – 00:24:22:18
Richard Carthon: It’s a big lesson. Don’t wait for don’t think that mass adoption is going to be with the big institutions coming, but it’s going to be the people, the disruptors, and create things for them so that we can, you know, keep growing and moving things forward. I think that’s a that is a good lesson. But but as we wrap up here, what is the final thought that you want to leave with everyone listening today?
00:24:27:04 – 00:24:28:05
Alexander Wilke: Final thought is.
00:24:31:11 – 00:25:08:15
Alexander Wilke: Maybe. Yeah. My, my initial thought when I came to blockchain. So that’s the the whole money transfer was kind of a magic to me back then. How does this even work? Is there someone having $1 and a database? And then that means that’s my money. And and I think looking at, at the crypto space and, and stablecoins, that makes it much more transparent to me. And it’s actually still magic, but it’s it’s much more transparent for me and what this money actually is and how this is moved.
00:25:08:25 – 00:25:42:18
Alexander Wilke: And I think just thinking about it, that there’s no one also no internal attacker can can interfere in in my money. I think that’s a thought I can now tell you which I find very magical and and very good actually. So I keep my money or mean as a business no one can touch. It’s there. And I can also move it and understand how this works. For me, this makes makes much more sense than moving money in the traditional world, actually.
00:25:44:11 – 00:26:14:27
Alexander Wilke: So people have more ability to be in control and have the options to use their money how they see fit. And I think that is building a more equitable future for everyone and giving power back to the people. As you know, we continue to expand the world of Web3, so definitely appreciate that final sentiment. Thank you for all the information that you’ve shared with us today. Again, for everyone that’s listening, you can go over to Pendulum chain dot org for more info.
00:26:15:11 – 00:26:21:18
Richard Carthon: And Alex thank you again for for dropping all the knowledge and as always for everyone listening stay crypto current.
00:26:22:26 – 00:26:46:11
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