Why Algo Capital DAO acquired a stake in Stabull.Finance – Interview with a Board Member

This is a special edition of our Substack, as we’re very excited to announce Algo Capital DAO’s 1st landmark token swap acquisition !

Stabull Finance
Algo Capital DAO acquired a stake in Stabull.Finance in December 2023, a decentralized money market focused on FX swaps on-chain, with a particular focus on liquidity for Non-USD stablecoin pairs.

For those unfamiliar with our new disruptive DAO model, a quick plug REMINDER for you to join our upcoming Webinar, where we’re going to give a detailed overview of our decentralized organization:

Algo Capital DAO Event:

📅 Wednesday 31st of January

⏲️6pm CEST

Reserve your place here: link

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So… Why did we decide to invest in Stabull ?
After looking into and ultimately passing on over 10 different projects last month, Algo Capital DAO has decided to throw its support behind Stabull Finance, and here’s why: 1) it’s clear that their protocol is tackling a real need in the market. 2) the chance to inject liquidity into the rapidly expanding non-USD stablecoin market is just too good to pass up. 3) we’re genuinely impressed by the Stabull team. Their mix of technical skills and business savvy is top-notch, and they’ve got a solid history of successfully rolling out projects in the crypto world.

Everyone here at Algo DAO is super pumped about this being our first partnership and working alongside the Stabull crew to make this venture a massive hit!

An Interview with Fran from Stabull Finance
In an exclusive interview, we sit down with Fran Strajnar, founder of Techemy Capital and board member at Stabull.Finance to share his background and an overview of Stabull and it’s ongoing progress.

ALGO TEAM: How did you start out in crypto ?
Fran Strajnar: I’ve actually been involved in the crypto space since the early days of the Bitcoin OGs. What really drove me to this space was the idea of separating money from the state, which seemed so obvious to me. So, I became involved in the first meetups and then later on, I was directly involved with structuring and raising Sergey’s $33 million for Chainlink in the early days. I’ve been involved with decentralized identity solutions and launched a media business, Brave New Coin. Later, I’ve been involved with structuring and transacting over $500 million worth of deal flow in our industry between 35 awesome projects that are household names these days. Eventually, I created Techemy Capital, which is licensed to solicit and distribute any type of instruments, utilities, securities, etc., to most of the world, and we have broker-dealer partners in places like the United States, UK, Japan, etc., for jurisdictional requirements. So, I spend most of my time on Techemy Capital where we effectively incubated, structured, licensed, sold, acquired, and disposed of dozens of different companies over the last 10 years.

And this is kind of a multi-part question here, really, because we were deeply involved in stablecoins a couple of years ago from a project that was doing the New Zealand dollar stablecoin ($NZD launch). We were using a platform (DFX) where you could get APY for staking your Brazilian real stablecoin, Turkish Lira, British Pound, Canadian dollars, etc. And that platform had some serious issues.

Following that episode, I gathered a number of stablecoin issuers for a series of workshops and asked, “What do we need from a common piece of industry infrastructure?”

The results of that were the common-sense stuff that you would expect. These are the active protocols; swap fees should go towards an insurance pool; there should be continuous audits and bounties… just a built-for-purpose tool and a more capital-efficient bonding curve for less slippage and, you know, better rates for the end users, a platform that every stablecoin issuer can go to and say to its users: “Go and swap our products here.”

So, I packaged this up and gave it to a friend of mine who has had several successful exits in licensing DeFi technology. Then Stabull Finance was born, effectively incubated with the original seed funding from Techemy Capital and pulling in the resources to stand it up, and so now we’re just hopefully at a point where the testing is nearly finished, and we then complete our pre-sale, ready for the token generation events, the launch, and the public market.

ALGO TEAM: how would you describe Stabull in simple terms?
Fran Strajnar: The one-liner is that Stabull is a purpose-built decentralized money market (DEX). Forex is the largest market by notional trading volume on the planet, with multiple trillion dollars per week ($7.5 Tn). We’re now seeing a very clear trend where Forex is coming on-chain, as the rise in many non-USD and USD stablecoins being minted into existence continues to grow, quarter after quarter. And the Uniswap, SushiSwap kind of decentralized swap facilities, they aren’t designed for something that doesn’t move so much – they’re not designed for forex.

So, Stabull is simply creating a better piece of math as a piece of infrastructure for stablecoin swaps, of course, commodities like tokenized gold, and other such assets, or even tokens that represent CBDCs. We’re not going to pick winners. What we do know is that there’s a critical piece of common infrastructure, a decentralized money market, that’s missing, and that’s what Stabull is addressing.

ALGO TEAM: Why might there be a demand for trading environment outside of USD stablecoins, which by now hold 99% market share ?
Fran Strajnar: So, if we have full confidence in the United States’ government and its Federal Reserve and the US dollar, petrodollar, Federal Reserve Note, Eurobond, and the shadow banking system, even if we have full confidence that this unsustainable, monolithic, global reserve currency has longevity, we’re still seeing an exponential rise in dollars coming out of bank accounts and being expressed through stablecoins for the Turkish Lira, the Brazilian real, and in many other national fiat currencies. And the reason for that is because there’s less friction. I can say, “Here’s 20 bucks for dinner,” or “20 lira,” or “pesos,” or whatever, and I don’t have to wait overnight. It’s instant, it’s safe, it’s final. And people simply enjoy the lack of friction when using P2P transfers over the legacy banking and financial system.

So, on top of that, we do not subscribe to the concept that the world’s reserve currency, the Federal Reserve Note, has much longevity. The entire system is at the end of its cycle. The US dollar will continue to dominate and outperform other currencies in the coming chaos. However, at some point, it must be replaced with another system. Even the architects of the current system are openly talking about replacing the US dollar – mostly with CBDCs. Obviously, with the rise of Bitcoin and other instruments, or the BRICS even proposing gold-backed currencies – we’re clearly entering into an era where not only the USD but maybe even the Federal Reserve has a finite lifespan.

As another example of Stabull’s value proposition, I personally pay people in Turkey, so I have to go and buy Turkish Lira for their invoices or GBP in England. And I don’t like the current platforms to swap those on. I want to be able to plug in a wallet, a multi-sig wallet, and then have the three people co-sign the swap on one of these centralized platforms that have capital-efficient rates and good liquidity, and then they can record that quite easily and reconcile the accounts, and later make the payments in the other national currency stablecoins that the contractors require.

There are multiple avenues to replace the 110-year-old financial system with something that is hopefully more sustainable. Stabull is a piece of infrastructure that is not going to dictate or guess which way the world will swing. It is instead offering a very clean, smooth swap facility for whatever tokens and fiat currencies expressed on-chain need a swap facility in a capital-efficient way. This is why I like Stabull. It is designed to do one thing, do it well, without the guesswork of who the winners are in the future.

ALGO TEAM: Why should a user choose Stabull over established alternatives like Uniwsap or Sushi ?
Fran Strajnar: Effectively, liquidity attracts liquidity. If you can offer a better, cheaper routing solution and have it integrated into 1Inch, Paraswap, and a bunch of others, and it continually comes up as the most cost-effective route to actually perform a swap in the DeFi universe, then that will attract further liquidity and encourage more people to participate. From there, we can deploy Curve’s factory pool on top of the liquidity of Stabull, as well as integrate dozens of other DeFi protocols: borrowing, lending, flash loans, etc., to either create financial instruments or structured income products, even principle-protected structured income products.

All of the hyper-financialization is not the job of Stabull; its job is to just be the simplest, most cost-efficient, capital-efficient swap facility for commodities and stable currencies. We achieve that by building better bonding curves and then, over time with our roadmap, we will integrate off-chain compute for subnets so that we can do on-the-fly matching of orders that are hitting the memory pool.

ALGO TEAM: Who’s on your team and what kind of expertise did you have to bring together to build Stabull ?
Fran Strajnar: I respect the pseudo-anonymous nature that our team requested due to the continuous gray zone created by the SEC with their retroactive punitive rulings. So, any investor who wants to conduct their due diligence and meet the team is welcome to do so – some are public, others prefer not to be, and I respect that. This is why I am doing this interview and not the people who are running Stabull.

The skillset that was required included a quantitative mathematician to figure out the bonding curve. If you’ve read our whitepaper, you can see that we’ve brought in some really experienced mathematicians and quants to figure out the evolution of AMMs and how to make them better over time, and that’s how we arrived at the current math of Stabull’s bonding curve. We will continue to improve upon that using AI and machine learning for subnets and off-chain compute as the infrastructure increases and matures over time.

So, apart from quants and a reliable set of developers, we have referred millions and millions of dollars across maybe 12 different development houses over the last 10 years, as our customers get capitalized and they need to go and build out their products. We have a decade of experience knowing who actually performs, who’s a specialist at AMMs, innovation theory, and the kind of Europe/Asia-based developers that we trust and have spent a lot of time with on previous projects.

We stood up an excellent MVP and now an alpha, again, using multiple different smart contract auditing firms, one of which we’ve worked with in the past and know does exhaustive QA testing. They are called ROD audits, and they have done a phenomenal job of going much deeper into the auditing than most auditors do.

And then for business development, we’re pulling in some people we trust, who have the relationships or network in the DeFi space and the ecosystem’s funds and projects. We also selected another who is more of a gray-haired, senior corporate relationship builder for TradFi, and kind of institutional-level dialogue, especially for helping to attract the right types of market makers, exchanges, and launchpads to publicly release this.

ALGO TEAM: Can you share a bit more on the role of the SFX tokens in your ecosystem ?
Fran Strajnar: It’s very simple. Similar to Curve, where the incentive is to accumulate as much of the governance token as possible for the purpose of periodically voting on which strategy, or in Stabull’s case, which pool should have how much APY. The governance token is the only way to rebalance, starting on a quarterly basis, the protocol fees. What happens to the fees? How much yield is going to which pool? Perhaps the Swiss stablecoin issuer wishes to increase, as part of some quarterly promotion, the yields in their pools, so they need to have enough voting power to achieve a better APY in their pool for that quarter. Also, eventually, for the progressive decentralization, the SFX governance token holders will be able to fire the developers or the management team and appoint a new one, transferring over DNS and website control. The main cost they hold can potentially, theoretically, be addressed through the process of progressive decentralization. So, this project is designed to be pushed out by the market makers, stablecoin issuers, market participants, and they get to choose how much of the protocol swap fees go towards where, or they may even choose to increase or lower the swap fees for any pool.

So, we found that this is the only way to do it. Otherwise, you just end up with a perpetual centralizing authority that decides where, potentially hundreds of millions of dollars in fees, goes, and they could just want to stick that into their pocket. So, we would very much like this to be dispersed and have the incentives aligned, so that SFX holders decide all the financially responsible components within a few short months of launch.

ALGO TEAM: how does Stabull make money ?
Fran Strajnar: Just like Uniswap or PancakeSwap make money, there’s a 0.2% swap fee for every swap that can be voted to be lower or higher by the governance token holders in the future. And then that goes simply towards the insurance pool, operations, marketing, yields, obviously, and buybacks of the SFX tokens, which go back into the multi-year emission curve on the APY that the users vote for.

Stabull is not going to launch NFTs, bells, and whistles all over the place. It just comes down to one thing, and trying to do it as well as possible. We’re talking about a multi-trillion-dollar FX market, getting our share of the more efficient system, and we should be able to get at least a share of that as the entire pie grows, as the entire FX on-chain is growing steadily every quarter.

ALGO TEAM: So what is Stabull achieved so far… what’s your traction ?,
Fran Strajnar: This whole thing emerged from pooling a group of stablecoin issuers into a series of workshops for the industry in 2023. So, the industry that needs this infrastructure told us exactly what they need. That doesn’t happen very often with startups; you usually have to guess what the industry wants. Stabull knows exactly what the industry wants and is building tools to match the industry’s purpose, including the alignment of incentives. It’s a nice way to basically tell their users to buy or sell products on Stabull.Finance.

We’ve talked to 12 different market makers, which is always important to ensure that we can find people to rebalance the pools on a periodic basis, as well as for market making and listing the governance token on reputable, large exchanges. We have several launchpads for the public sale, several listings after the public sale that include the token the governance is in, and we have a dozen stablecoin issuers ($TRY, $SGD, $NZD, and others) where we just need to make the pools and then we can go back to them and say the pools are ready, we put a small bit of liquidity ourselves, please add your own liquidity and start testing it yourself.

So, we’re about to hit that next phase, loading up around half a dozen pools across two or three EVM chains. Then, over the next few weeks, we can build up liquidity and bring the market makers on board, and they’re communicating this to their wider network. So, we’re hoping that the industry itself becomes the distribution and marketing force, so everyone says, “Okay, this is live, we got a new pool for our product on Stabull, check it out,” and go from there.

While obviously, I’ve also talked, but I can’t disclose too much, if you can appreciate, with all ecosystem funds like Polygon and Avalanche and everyone else. They’re all excited to see something that is capital-efficient for stablecoins, as it also increases their network transactional revenues. So, they’d like to see infrastructure like this come to market that integrates their chain.

There’s a new chain that is going to be the most hyped-up, crazy thing you’ll experience in your life. It will probably be at the level of Solana FOMO or others but even crazier. And we’re working very closely with the founders from there in various ways. So, there are some very big things coming that I’m under NDA about, but I’ll be able to talk more about in the future.

Basically, we have everything we need; we’re just finishing testing, and then rolling out small liquidity into various chains and setting up pools, and then we’re growing those. And then once we have enough of the presale to pull the trigger on a six-week sprint of marketing, community building leading into the public sale and listings.

ALGO TEAM: Why did you partner with Algo Capital DAO and how you do find yourself since we started working together ?
Fran Strajnar: Algo DAO presented a very sensible partnership, where effectively your network is opened up because you have exposure to the project. The commercials are sensible and we did seem to click from the get go on how we see the world. We found it enjoyable because we have other networks that are helping us reach more people. It’s a numbers game; we need to reach the right partners to be able to find the ones that would want to capitalize on this or have non-capital benefits for liquidity or exposure.

Quite pleased with the process and help from you guys so far. The token asset swap you’ve come up with makes perfect sense for us – it really helps align the incentives much better than a traditional advisor/founder kind of relationship.

Want to learn more about our DAO ? Join us for an exclusive live presentation
ALGO CAPITAL DAO – EVENT

📅 Wednesday 31st of January

⏲️6pm CEST

Reserve your place here: link

ALGO TEAM: Can you share more about your current investors and the on-going pre-sale ?
Fran Strajnar: Having advised over 30 different projects in the last 10 years, what we expressly wanted to avoid is having huge differences between early rounds. So, we did our first seed round over nine months ago, and that was at $1.20. In this current main pre-sale round, it’s $1.40, so it’s not that crazily different.

Because sometimes, you end up with prices 10 times cheaper for early investors, and that creates a lot of sell pressure. When the public sale is at $2.00, it’s not that much more than the pre-sale, and the details are in the vesting schedule, obviously. But a lot of these projects try to launch with only like half a percent of the total supply available on day one, and then it’s just 99% sell pressure after that. Stabull is trying to clear out 20% – 30% initially in a sustainable way to parties that want to accumulate so they can vote to increase APYs in their pools.

Ongoing Pre-Sale Round Terms:

Tokens for Sale: 1.4 million

Price: $1.2

Discount: 13.3%

Raise Amount: $1.82 million

So, we have Titanblock Capital as a lead, and HNWIs that are DeFi-savvy holders, or large holders of stablecoins that want to stake. And so, that’s a nice alignment because we want them to add TVL and dust off their stables and start earning APY once it’s available for staking.

We have a few offers from some of the more conventional VCs. We decided not to take them because they want to rearrange vesting schedules and basically have all kinds of crazy preferential treatment that would create sell pressure, so we’re avoiding that. We’re also making sure that the exchanges do not have a ton of tokens, so they can’t create a ton of sell pressure once we list. We spend all this time advising and incubating a project and then teams working super hard. The last thing you want is for it to be a bad launch because some VCs or exchange have too many tokens as part of their participation.

So, that’s been super important to us, much more important than just having huge names on the cap table. We have good people who know our value add and have aligned incentives for the industry. I’m very happy with that. Now, we don’t require any more strategic investors; we’re happy to take any HNWI or crypto fund.

They won’t be getting any special treatment. Everybody has an even playing field, and as I said, the launch is only a $2 million market cap, so it’s going to be, you know, hopefully a very good launch.

ALGO TEAM: Why should an consider investing in $SFX right now ?
Fran Strajnar: While I’m not allowed to make forward-looking statements, I can say that we’re starting with a very low market cap and a 33% unlock for pre-sale investors on day one. This is to ensure that there’s enough liquidity out there, and it’s listed on exchanges that have so many users that if anybody eventually wants to sell, there’s at least enough liquidity for it without impacting the market price too much.

People should consider this investment because it’s a key piece of industry infrastructure whose markets in non-USD stablecoins, and even USD stablecoins, are growing exponentially. The Forex market is the single largest opportunity in DeFi in the next 18 months by notional trading volume. Launching at a $2 million market cap project from several major exchanges is a healthy way to de-risk for early investors who prefer to either hold their tokens long term or have enough liquidity if they want to take their principal back. We will be adding to exchanges every couple of weeks afterwards, adding pools, adding more EVMs.

It’s nice and simple, understandable. The only expansion for Stabull is adding more issuers, more pools, more exchanges, and market makers. Then, the decentralized voting on everything will become progressively autonomous to the point where, by Christmas 2024, SFX token holders can literally fire the management team if they wanted to.

Are you excited as we are about the future prospects of Stabull ?

If you want to join us in financing and building out this important piece of DeFi infrastructure, BOOK A CALL with us or someone from the Stabull team for more details on the current round and how to participate.

Given the existing demand, the pre-sale is expected to close rapidly, so as always it’s a case of first-come, first-served.