[UPDATE] Block by Block: Kinto and Ramon Recuero

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There was an error in yesterday’s article (we accidentally added a section from a different article), and we apologize for any confusion caused.

Happy Sunday. Welcome to another issue of Block by Block, a series where we highlight conversations with founders and operators. The idea is to ask thoughtful questions for projects that want to achieve more media exposure.

In today’s issue, we have Ramon Recuero from Kinto — the first Modular Exchange.

Kinto enables access to the best assets in DeFi through their tailored blockchain and custom smart contract wallet, engineered for maximum security and seamless user experience.

To learn more about Kinto and its products, check out my conversation with Ramon, Founder of Kinto.

-Marco

Disclosures

1. Today’s issue is sponsored by Kinto.

2. None of this is investment advice.

3. The Founders of Launchy hold no exposure in Kinto.

Kinto and Ramon Recuero

Ramon Recuero is the CEO and co-founder of Kinto, the first Modular Exchange. Kinto enables access to the best assets in DeFi through their tailored blockchain and custom smart contract wallet, engineered for maximum security and seamless user experience.

Ramon, is a seasoned entrepreneur and technologist. He founded his first company, Netgamix, in 2010 and later worked as a senior game engineer at Zynga. His experience also includes roles at Y Combinator, Open Zeppelin, Moz and Google.

Ramon founded Babylon Finance, a DeFi asset management protocol on Ethereum, where he raised an angel round from 90 investors, designed the tokenomics, authored the white paper, and led the team to launch a functioning DeFi protocol. This included an ERC-20 token and the sector’s first DeFi NFT, known as Prophets. Babylon Finance achieved over $50M in assets under management before its closure in October 2022.

Learn more about Ramon Recuero and Kinto below.

Quick takeaways:

• Kinto was inspired by the risks of centralized platforms, emphasizing security, compliance, and mass adoption.

• Kinto introduces the Modular Exchange (MEX), which combines the best of DeFi and CEX without compromising user control or security.

• Kinto unique layers include a non-custodial smart wallet, identity layer for compliance, fiat on/off-ramps, chain abstraction, and a gasless L2 rollup.

• Community-driven governance decisions shape the Kinto ecosystem, with a long-term mining program rewarding active participants.

• Enhanced security measures, compliance-friendly infrastructure, and institutional access set Kinto apart from traditional DeFi platforms.

• Kinto chose Arbitrum Nitro for its robust technology and support while offering developers security, compliance tools, and incentives to build.

What was the defining moment that drew you into the world of crypto?

When Facebook changed their algorithm overnight and destroyed Zynga’s revenue model. Clear lesson that if the platform is not decentralized, you are at the whims of your platform.

What is Kinto? And what is a MEX?

Kinto is the first Modular exchange (MEX). A modular exchange is built on decentralized technology, with non-custodial wallets and fintech level UI/UX. It incorporates the best features from CEX like fiat onramps and account recoverability without becoming a honeypot of user’s private information. It’s non-monolithic and permeates every layer of the stack. Each layer is built upon the leaders of DeFi. Same way the apple store is not a separate application that you need to visit before opening a mobile app or the browser is not a separate app that you need to use before browsing a site. They are seamless integrated experiences.

A MEX is comprised of the following layers:

1. A non-custodial smart wallet that is fully recoverable and allows you to access the crypto ecosystem freely. Account abstraction is a must to be able to bundle users transactions and abstract gas costs.

2. An identity layer that meets compliance requirements but always keeps users in charge of their own data. User’s data is private and on-chain information is not linked to users PII.

3. An onramp/offramp layer that allows users to buy/sell crypto directly from their bank account or debit/credit cards.

4. A chain abstraction layer that allows you to connect to all the best protocols and primitives of DeFi, wherever they are.

5. A custom L2 rollup to provide gasless transactions and preserve the KYC/AML compliance requirements.

Fun Fact: Kinto means “golden road” in Japanese. The name is in unison with Kinto’s spirit to build the golden road to the future of on-chain finance.

What is the inspiration behind the creation of Kinto and the MEX concept?

The inspiration behind Kinto stemmed from challenges and critical needs observed in the cryptocurrency ecosystem, particularly surrounding security, adoption, and the frequent occurrence of scams and hacks. A painful previous experience at Babylon Finance solidified even further the need for increased safety on-chain; Babylon suffered significantly as a consequence of a hack on Rari Capital leading to a destructive bank run on deposits. This incident underscored the vulnerability of crypto assets and the dire need for enhanced security and trust within the ecosystem - no one is going to care about all of the benefits of crypto if their assets are at risk or they are losing their net worth. 

In addition, CEXs have numerous challenges. They are traditional software companies that offer users limited reach into the crypto universe and they charge you high fees for this “privilege”. In many instances, users end up paying a premium without experiencing any of the benefits of the decentralized technology. Most users never install a crypto wallet and do not leave their walled gardens due to complicated onboarding flows and poor user experience. That’s why users do not understand what crypto is. An alternative needed to be created.  

The need to create a safer space for users to participate on-chain in conjunction with the challenges perceived in CEXs led to the birth of the MEX concept and Kinto, with the aim of bringing mass adoption to the on-chain financial system.

Kinto’s Launchpad and Token Sale

Kinto is creating its own fully on-chain token Launchpad, which is on-custodial and Sybil-resistant by default and supports non-US investors and US accredited investors across 200+ countries. The launchpad will require the following criteria from any token that wants to be listed to ensure retail is prioritized over insiders:

• DeFi and RWA related projects.

• Product must be live with real users and TVL.

• Token needs to be majority owned by the community.

• Treasury owned by governance with revenue streams that flow to it.

• Low FDV. Provide a chance to enter at the same valuation as VCs.

• High Float. At least 30% of the tokens circulating post sale.

• Team needs to have standard 4 year vesting with 1 year lock.

The first token to be launched will be $K, Kinto’s own token, on Feb 18th at 10am PT. You can prepare for the event by creating a free Kinto account and depositing USDC. 

On Kinto proto-governance and airdrops

Kinto has aimed to work toward progressive decentralization from day one. At launch, early participants (known as Kinto Founding Members) engaged in proto-governance, voting on three key proposals with impressive engagement: over 17,000 community members participated, making these some of the most active and highly-engaged proposals on Tally.

The community decided on the creation of the Kinto DAO and its constitution, the creation of the $K token, and the ratification of the mining program. The criteria for transferability of the token to be enabled were also set through community voting, requiring two of three of the following: a 20% token float, a minimum of $100M in total value locked (TVL), and a stage one role at classification. These milestones help ensure maturity of the chain before value-capture; again another testament to Kinto’s focus on sustainability and long-term vision. 

Discussions in Kinto's Discord have highlighted varying perspectives among participants. Some are fixated on potential token listing without engaging with the foundational documents. Others advocate for a more informed approach, emphasizing the importance of understanding Kinto's long-term objectives rather than short-term gains. Despite external pressures and misconceptions about rapid gains, Kinto remains committed to building a lasting and sustainable part of the ecosystem. The team is focused on substantive growth and infrastructure development, not just quick wins or temporary hype. Kinto's approach aims to ensure that any value capture is genuinely reflective of the platform's utility and benefit to users, with a clear stance against speculative practices that could harm the ecosystem's health and longevity.

The Kinto Mining Program

Kinto’s mining program is set to last for ten years, with rewards gradually decreasing over time. Kinto token can be earned via Kinto’s never-ending airdrop seasons, each of which Kinto's goal is to create a sustainable, enduring part of the ecosystem that reflects its core philosophy - this approach is also reflected in its tokenomics. 

Rewards are allocated based on the amount of capital users hold on Kinto, the duration of that holding, and the total value locked (TVL). This runs as a standard during each airdrop season in addition to unique opportunities that vary season by season - for example, trading on Kinto currently yields higher rewards during Onsen Airdrop Season 2. Developers who deploy on the network also earn mining rewards. This is an ideal time to participate in mining while Kinto is maturing and the rewards are at their highest.

Deciding on the Arbitrum Nitro stack 

Kinto initially explored many different technologies - initially running three different versions of the Kinto across various stacks to evaluate the best fit. The decision to adopt Arbitrum Nitro was influenced by two primary factors: the advanced technology and the exceptional team at Offchain Labs and Arbitrum. Their responsiveness and support were crucial in Kinto's decision-making process. They shared a mutual commitment to fostering ecosystem growth and sustainability, aligning well with Kinto’s long-term objectives making it an easy decision to utilize Nitro. 

Why developers should build on Kinto 

Smart contract hacks are every developer’s nightmare. Kinto’s security features vastly reduce the risks for builders in the network who can focus on innovation whilst utilizing Kinto’s out-of-the-box offerings. It’s also a great environment to utilize and explore components such as account abstraction which are gaining traction in the ecosystem and will inevitably become industry-norms. 

At the same time, Kinto presents a unique value proposition to developers via the network’s access to previously untapped capital and potential to interact with institutional players. This access is a significant draw for developers, especially in a landscape where traditional on-chain activities can be limited by compliance issues.

Kinto has numerous attractive factors for builders that are unique: 

• Free KYC, KYT and AML. Compliance tooling out of the box.

• Sybil resistance.

• Better UI/UX through Account Abstraction and Passkeys.

• Higher level of security through Hypernative and Ironblocks.

• Insurance Policy to all Kinto users.

• Mining rewards for developers. 

• Ability to build institutional and ICO use cases etc. 

• Composability in the RWA space.

Rapid Fire Questions

1. What's one piece of content every aspiring investment professional should read/watch?

   • Jonathan Blow - Preventing the Collapse of Civilization (not crypto but timeless for developers)

2. What’s the most underrated use case of crypto?

   • People underestimate how important stable coins are and how widely used/ needed in many parts of the world like in Argentina.

3. What’s your most contrarian view in crypto right now?

   • ETH is well positioned when the real bull cycle starts once the monetary stance by the FED becomes accommodative.

4. What’s the biggest risk that the crypto space is facing?

   • Given that hostile regulations and operational chokepoint are being lifted with the new admin, the danger lies within the short-termism and value extracting games of many of the participants of the crypto space. We need to focus on building real products that provide value to users not on vaporware that sucks liquidity from retail.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.