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Building India’s largest crypto exchange | Neeraj Khandelwal @ CoinDCX
168 Plays2 months ago
Neeraj Khandelwal is a passionate Indian who aspired to serve his country as a civil servant. When his initial plan fell through, he channelled his determination into exploring new ways to fulfil this objective. He saw the transformative potential of cryptocurrency and invested in building India's crypto infrastructure, leading to the creation of CoinDCX. In this episode, he decodes how crypto will change the world and how CoinDCX is paving the way for this future.
Read more about CoinDCX:-
1.Blockchain critical for India: 40u40 2024 Neeraj Khandelwal, CoinDCX
4.Revolutionising Finance- AMA with Neeraj Khadelwal
6.Celebrating 6 years of building the future of Internet in India.
7.4 observations on India’s booming crypto sector from CoinDCX co-founder Neeraj Khandelwal
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Transcript
Introduction of Neeraj Khandelwal
00:00:00
Speaker
Hi everyone, I'm Neeraj. I'm a co-founder at CoinDCX.
00:00:17
Speaker
If you've watched the Bollywood movie Twelfth Fail, then you will probably relate quite a bit to the guest of this episode of the Founder Thesis Podcast. Neeraj Khandelwal is a small-town boy who was deeply passionate about doing good for the country and after graduating from IIT Bombay, he relocated to Delhi to prepare for the civil services exam.
Career Restart and CoinDCX's Formation
00:00:36
Speaker
After multiple failed attempts, he finally decided to restart his career, which in itself was another struggle-filled journey.
00:00:42
Speaker
But his innate curiosity, drive and passion made him succeed first and soon he was thinking again about how best he can serve his country. The unusual choice Neeraj made at this juncture is what sets him apart. He decided that if India is to be a world leading economy in the next 30-40 years, then he needs to invest in building the crypto infrastructure of India. And that is what led to the birth of the largest crypto exchange in India, CoinDCX.
00:01:08
Speaker
In this captivating episode, your host, Akshay Dutt, decodes how crypto will change the world as Neerat sees it, and how CoinDCX is paving the way for this future. Stay tuned and subscribe to The Sounder Thesis Podcast for more such fascinating conversations.
Challenges and Reflections on IIT and UPSC
00:01:33
Speaker
Welcome to the podcast. I can see on your LinkedIn, you are an IIT, Mumbai product. And so what did you do after IIT Mumbai? So I did my electrical engineering in IIT Bombay P-TECH and passed out in 2012.
00:01:47
Speaker
you know It's a different story how I reached there, but I did not sit for IIT placements actually instead I went for ah for UPSC civil services preparation that was What I did and then failed miserably of course in ah in those two attempts that I gave. What made you sacrifice a good job opportunity because obviously placement would have been good from IIT and then spent two years not earning anything.
00:02:18
Speaker
ah garev we sun navaau cuniclaro whatever but It must have been ah like a kind of a slightly tough time. Oh yeah, it was very tough time and I won't recommend anyone.
00:02:36
Speaker
teaching, IIT, placements, and then going for UPSC service. I don't think that's the best idea. If you want to, then then maybe later, you know after ah working for a couple of years, and then going for it is a better idea. A lot of people actually go directly. and and And see, most of the types, it's inspired by, it's typically inspired by, you know and during your childhood, you see,
00:03:05
Speaker
that IAS and a collector, you know, district collector, ah DM ah as as something, as some aspirational thing, you know, especially in North India, it's much more prevalent. And and then ah the typical path for that is to just do the college and go to Delhi, old Aljinder Nagar and Karol Bagh for preparation. And yeah, so Vodha.
00:03:30
Speaker
I think it was set in in my brain, you know, in my mind since very early days of maybe eighth class, ninth class,
Rediscovering Technology Passion
00:03:39
Speaker
tenth class. I used to hear all the time that this is very good and this is one of the, I mean, there is one part where you become an IES and you go corruption way, right? But on the other hand, there is also ah the aspirational thing where ah you become an IES and you do good for the country.
00:03:58
Speaker
um And I was on that path, you know, I wanted to do good for the country some way, you know, in one way or another. Why do IIT at all? but ah is scalia a kohibi graduation concert Like, what was yeah and suddenly fightra yogi i take ah nine ninth class mayor sun turkey ah yes hicar and so za but bar me final lu but it just that? During that time it was seeded.
00:04:27
Speaker
Yeah. And i teach yornauskato alllegi answer ah I can go deeper into that, but yeah. Okay. Okay. So, after so you did two attempts for the two years you invested in this. ah And then you decided, good yeah nihora so then what? Yeah. as The second result, taa the result at I ran away from Delhi. you know And then I came home.
00:04:57
Speaker
I came home and three years, there was a gap of three years of college career teal bo yeah and you have never done a job. Now, that is when I realized one thing that whether you are from IIT or whether you are from any college, if you have a gap of three years, nobody's going to give you any job. ah Just like that, you know, because When you say that I prepared for UPSC for three years, that does not count for a in the resume. I mean, that does not make up a good resume. You know, so when you create your resume, every, everybody questioned that into you pass out in 2012, this is 2015 for three years, you and then you ah failed in UPSC. It's not that you have something to show for your efforts, right? I actually applied.
00:05:49
Speaker
various places I applied for 50 different jobs at least I applied everywhere I applied in more Bombay I applied in Jaipur I applied in small startups in big companies everywhere you know and like no luck just no luck I didn't get to play it anywhere because I didn't know how to interview well. I didn't know how to solve those puzzles and questions. I realized then I spent a few months at home and I read it i read ah books. I read some books. I read it a lot of books actually. And I realized that I think
00:06:34
Speaker
what I am good at how I can contribute to to the country and to like how can I build myself from here is if I do what I like I just started ah thinking that what do I like the most? What do I have natural and keen interest? Something which I can do and I don't need even feel like sleep. Even if I'm feeling sleepy, I would continue doing it. you know Somebody would have to come and stop me from doing it. What is that? What is that inner thing that I i like so much and I've been doing since childhood without anyone forcing me? What are what are those? What is that kind of a thing? So I searched for that.
00:07:19
Speaker
you know And I got it. I also got that. but from an environment from From my childhood, ah i was very I was this computer person. you know So I got my computer when I was in 2004 or so, ah four, five, some in that year. And I used to be champ of the computer. i could i used to like ah Format it and format it and and go deeper it into his file system and file is structure Open the CPU up and see what are there? Okay, it's cooling fan is out of order. So get it repaired and then its power supply is not working, you know all its power supply we need to or or upgrade its CD player and May ah instead of just reading the CD just get a writer CD writer as well and you know and all of that and I was
00:08:14
Speaker
I was a champ of all of that and I remember that if some of other computers got out of order, I used to be the person they reached out, you know okay, he this guy will figure it out.
00:08:27
Speaker
you know so than an avid gamer, I was a pro gamer, you know, computer gamer and ah and that that's my childhood, you know, that's my entire childhood. This is what I used to do. I used to play, I used to love his speakers, like just speaking speaker technology I used to love, right? I used to ah build my own speakers. So I realized that with this size of a speaker, you need this kind of a box. you know And then I got the wooden box made from a carpenter and then fit those speakers. And then you know repair and all of these, I used to, these were, no one told me to do these things you know in my childhood, no one. my My mother, my father, my parents, my brother, they didn't even realize that, okay, the it was all normal, you know but no one told me to do these things.
00:09:17
Speaker
ah and and And after failing at UPSC, I realized that I think that's what I like. That is what I would love to do. For my entire life, that's something I can do.
Career Transition and Crypto Exploration
00:09:31
Speaker
And by that, I mean ah that but technology, engineering and technologies is what I like. I i got like 69% in my 10th class. But I got 143 rank in IITJ.
00:09:48
Speaker
So the reason for that is also, there's a huge gap. I mean, no one in CBSE board getting 69% in 10th class and then 143. Very, very good rank, you know, ah in IITJ.
00:10:01
Speaker
the The reason is also you know because when I studied for IITJ, all those physics, ah PCM, physics, chemistry, and math, it was natural to me. It was very natural to me. No one forced me to study. you know I just simply liked that. And I studied for 16 hours, 15 hours. you know And ah from a backbencher in 10th class, I just did well in IITJ also. So connecting these dots, I realized that I should go for technology, engineering things. And that is my calling. That is what I should do.
00:10:32
Speaker
So yeah, with that motivation and with that clarity, mental clarity, I went into the went into the job market and then applied for engineering jobs, where I again failed miserably. And i but to it I applied at a lot of places, right? And and no one just took me in because I was out of touch. I mean, I didn't know how to code. you know I didn't know anything. I didn't know how to give an internship.
00:11:00
Speaker
ah and And so what I did, then I just left Jaipur, you know, I just left home and I came to Mumbai just without any job and without anything in my hand, but I just came to Mumbai and my friends were doing some startups and they were doing jobs. I thought I live with them here and there and figure something out. I mean, ah that's what I will have to do. I cannot, maybe I'm in Jaipur and I don't have that exposure.
00:11:33
Speaker
So I went to Mumbai and this is my friend Abhinav. I stayed with him in his room. ah He gave me place to stay. right Of course, I didn't have place to stay. I didn't have any earning as such. and i' yeah I took some money from my father, no doubt about it, but it was not much. It was just enough to... you know i could It was not a good idea for me to spend it on room rent. So i I stayed with my friend. and ah
00:12:05
Speaker
Yeah, under his guidance also learned. And then he he was running this company dormant. He also received some funding, right? And I begged him that bro, I will appear for interviews and I don't need your intervention as such. ah So, but let me ah at least give a chance to interview in your company. Right. Yeah. And then I interviewed.
00:12:34
Speaker
but no but in technology I failed again you there as well and I luckily got this ah ah and chance to work in Dormint as an operations manager actually as operations manager and Dormint was doing, Dormint was having a laundry business you know back then laundry business and oh I got a job as operations manager and I went to Kurgaon for establishing company's laundry business there. I hired delivery boys, I hired area managers, set up that office, you know, ah set up the supply chain of picking up delivery and then picking up laundry, dirty laundry of people and then
00:13:24
Speaker
ah giving giving it to the hub, and then getting it paused directly, then returning it back ah to the customer, all that supply chain is what I did. ah During the day, right and during the night I studied engineering, ah during the night I studied the technology, and I studied coding, I studied ah ah software development, and within dormant I got placed in the engineering.
00:13:53
Speaker
You know, then eventually after six months, uh, uh, I got placed in engineering in dormant and, uh, that was life changing for me. I mean, that is, I think that is where my career is started. You know, uh, that's how my career started. Actually. the and It's not long ago. That's 2015 and towards the end, I can see your vice president engineering, so which means that you must have got promoted there also in dormant.
00:14:22
Speaker
Endowment. Oh, yes. Yes. Yes. So like I mentioned, when you do something, which you inherently like, like, no one has to force you to do that. You never say no for that. You never say if you're free time, you'll automatically do it, you know, without anyone telling you to do it. That's what technology was for me. And, uh,
00:14:50
Speaker
I just learned software engineering so fast, so fast. Within one year, I was, I mean, I was lucky as well to be in that place, but I picked it up really fast. Like in one year I was able to handle larger scale systems.
00:15:11
Speaker
in just one year, you know, ah not just basic software engineering, but, uh, I developed doormat website in like one month, you know, uh, single ended Lee and then, uh, handle the backend systems, front end system dev DevOps so much. And in one year I was like, I had, I was king of in and out of the dormant technology and the systems, you know, there. So, uh, it was, uh,
00:15:40
Speaker
Yeah, I mean, like I told you, once you like something, then because when I was working in Dormant also, as an engineer, I used to, I remember I used to work like at three AM, I'm still coding and I'm learning. m
00:15:57
Speaker
Again, like I had nothing else to do. The only thing that I did through the entire day, no party, you know nothing else. Just do coding, just learn technology, just work on the systems, just improve the systems, just learn the systems. That's what I did the entire day. you know ah Have food, to go to office, do this, come back, have food, and do this. you know Sleep while doing it. So that's what I did.
00:16:23
Speaker
And yeah, that gave me a huge push. That gave me a huge push. And then why did you move on? I think from Dormant you learned Hola Chef. Yeah, Dormant was going through some tough times and there were financial challenges. And then that's the reason I switched to Hola Chef.
00:16:46
Speaker
ah Hola Chef was a food delivery company, food services company, and also a cloud kitchen company. you know So it has ah it had a delivery business as well as a cloud kitchen business. So of course, it had customers who are wanting, who used to order food from holachef.com and its app and all of it.
00:17:18
Speaker
And then then there was a supply, you know, like delivery boy network of all of that. So I was responsible for managing and growing the entire engineering. Initially, when I joined Hola chef has outsourced its entire technology, which was very costly. My job was to bring it in house and to establish a team, set up a team from a scratch, hire the first person, you know, ah grow the team and learn the systems from outside, you know, from the contractors and ah bring them in-house, set up internal engineering processes so that everything can be managed, you know, and that's what I did. I took eight months, seven, eight months time frame for me to do it. And yeah, then I was free ah from Holashev as well. I mean, then that project was over and then I resigned.
Vision for India's Future with Blockchain
00:18:11
Speaker
from Holashek actually, because then it was business as usual. right so And then i resigned it yeah and I resigned and then I waited for a couple of months before starting CoinDCX.
00:18:25
Speaker
Okay, did you resign with the idea of CoinDCX in mind or after resigning you searched for that what next and then you discovered like how did you discover? I i was in crypto i was interested in crypto since few months or one year you know before I resigned but it's not that I had fixated I had fixed what I have to do. But I resigned from a view that, okay, I've learned the technology and i have all of this I've learned and I've worked and I was fairly comfortable that I will not ah be out of money and I will not die ah out with hunger. you know ah like I was confident and that that's when I thought I should just leave and do something more do something crazier.
00:19:14
Speaker
you know and something which is more scale, I mean higher the scale, something bigger and which can contribute, also contribute to the country. I had this thing of like, I'm a patriotic person and I I think about the country a lot of times, almost on a daily basis, I think, what can we do? you know to I don't know if you know these stats, like Goldman Sachs has predicted, had predicted that by 2075, 2075, India will, China will be leading in terms of GDP, you know, around 60 billion, 60 trillion dollars will be Chinese GDP. And Indian GDP will be between 50 and 55. The second.
00:20:07
Speaker
And just below that will be US, you know, again in the same range at the third place, you know, so China, India and US. My life's mission is to change that and make India the first rather than. Well, inspiring. Amazing. So, and it is, I built this over time, you know, if you think from that perspective, you have to do some, and in a longer time horizon, China invested in technology manufacturing way back in 1970s and they are reaping its benefits now. It takes 30 to 50 years, right? It's not like you do something today and you see the results at this scale. So if we want to change that equation,
00:21:00
Speaker
in 2075 and I'll be 80 years old. So, you know, that's fine. I mean, if I live long enough, then by then I will be 80 years old and that's fine. Right. So that's a good, good enough goal. Uh, if you want to change that equation, you have to do things now, like now. So I want it. and how does the I also have this belief. How does, like, how does crypto tie into this? You, you, I understand your, the vision, which is driving you, but how does crypto tie into that?
00:21:30
Speaker
Yeah. Yeah. So I also believe that technology is is the growth, you know, this kind of a growth will come with technologies, building technologies, which foundationally, you know, which eventually will lead to higher GDPs and higher throughput, higher outputs, you know, ah you invest in foundational technologies. That is the most important thing.
00:21:59
Speaker
It's not just one, multiple. I mean, we are also building ah we are also setting up chip manufacturing, for example. That's a foundational technology for um but establishing a good computing base, good computer industry you know in the country, and but establishing a good electronics manufacturing, basically. So ah all these things, you know ah investment in foundational technology is the key, is the most important thing.
00:22:28
Speaker
and and it If you see in 2016-17, I thought what is that foundational technology which needs investment today and investment which I have the capability to do and an investment which can make a meaningful difference in 30 to 50 years to the country. What is that? So I searched a couple of industries. right AI was also there back then, but AI was a very tech capital intensive. and
00:22:59
Speaker
And like I told you, I i just came out of hunger. you know So that was something which far fessed for me. So yeah, it was out of question. Manufacturing. I've always believed in manufacturing. you know If we want to improve our nation's output, then manufacturing, because right now we are selling software and buying hardware as a country. So.
00:23:25
Speaker
I think we need to sell software but also sell hardware, not just software. So manufacturing is key but that is also capital intensive and I was not ready for it. Maybe I am right now but at that point in time I was not.
00:23:41
Speaker
so Uh, software was clear cut, you know, and in, within in software, have we already had TCS Infosys and we had good, you know, as a servicing industry, weird, all of that established, you know, like why to repeat all of that, you know, so, and and blockchain, I was studying from, from since along. And I thought that.
00:24:01
Speaker
I had believed that blockchain technology is going to form the new backbone of the internet. I mean, it is going to be a major, major technology powering the internet, you know, throughout the world. And we need to excel at this technology. We need to grab this technology, you know, and excel at it, ah make it mainstream in India you know and lead from that ah because and this is it will not have an impact in like five years or six years, but it will be in decades down the line. ah It is like 1990s of internet.
00:24:40
Speaker
blockchain technology in current state is exactly at the same state as internet was in 1998, 1995, you know, in that era. And that is where you need to invest. This is the timeframe where you need to invest your time and energy, you know, to make it happen. So yeah, I mean, I got that oh sense and that's why I jumped into it. Okay.
00:25:07
Speaker
um Let me quickly ask you a bit on blockchain before continuing with your story. So when you say blockchain will be the backbone of internet. So you're talking in terms of transactions,
00:25:24
Speaker
ah you know, like so, for example, a lot of transactions could be done on blockchain, be it yes exchange of currency or ah ownership records. ah So yeah that is what you mean.
00:25:37
Speaker
Precisely. because the internet is ah Today, internet is used for information more. I mean, 100% internet is used for information actually. right but Even if you're transacting, you are sending an information to your bank that I want to transact and the bank is transacting on your bi behalf. right You are just sending an encrypted and authorized information to your bank. So internet internet is but primarily used for information today.
00:26:08
Speaker
That's a 99.9% use case of internet, even though we are able to perform these transactions, but these are not natively happening on the internet. These are happening off internet and internet is just a messenger you know in between. It is fine. It's a first step.
00:26:26
Speaker
I think all these transactions, all the transactions that we do today will come on blockchain because blockchain is a way to trend to do transactions natively on the internet you know and that's very huge. that That makes transactions very, very efficient, secure.
00:26:46
Speaker
Programmable. Think of it like this. UPI is good. It is really good. It's the fastest transaction platform you know in the world ah facilitating all these transactions. But UPI is not programmable. Simple use case. I'll give you one example. Basic use case. It's just one of thousands of use cases. Suppose I am using some internet internet services on a paper used model.
00:27:11
Speaker
Right. That this paper use model simply is not possible with banking infrastructure. It can only be done with a paper use. Like you use basis, your number of minutes used you know at that granular level, not at a monthly level, but streaming videos, you watched for two minutes. You know just pay for two minutes. You don't pay for an entire month. Netflix.
00:27:36
Speaker
you know Some people just watch Netflix you know ah ah for like one hour and pay for entire month. Those people can pay for one hour also. That should be possible. At least possible. I'm not saying that this is a good business case. I'm just saying that this is the new technological ah ah enablement.
00:27:56
Speaker
that that you get, and you can build applications on top of these things. This is just one of the things I'm mentioning. There are hundreds of more programmability, ah I will say, enablement. So programmable transactions allow you to do so much you know ah beyond the simple send and receive. So I think that is the future. Loan. Just imagine loan.
00:28:25
Speaker
Now, I have my assets in the offline world. A company giving me a loan, they don't have any understanding of all those assets. I am eligible for handsome amount of loan, but it's just not, I mean that information is simply not available. When assets come on the blockchain, you know all these assets that I own, you know when these come on the blockchain,
00:28:49
Speaker
then it will come completely disrupt the lending and borrowing industry. And that's going to happen. I i have these jeans and I have this t-shirt. Just imagine, I mean, this t-shirt is a Gucci t-shirt. It is not, but just imagine it's a Gucci t-shirt. I instantly become eligible for a loan. If this record is there know online,
00:29:15
Speaker
So what I'm trying to say is when all the assets also come on the blockchain, then transaction or are also happening on the blockchain, you won't even imagine the kind of world that will exist. It is similar to how people in 1970s could not have imagined paying online and ah you know could not have imagined this this current payment systems or ah current internet systems. you know Similarly, it's it's very difficult to imagine that kind of a world you know when everything, all the transactions happen on chain on the blockchains. It's a very powerful thing and it will change. and it's ah I think a country excelling at this will have a natural advantage.
00:30:00
Speaker
you know If you increase India's GDP by just 0.1% because of massively efficient transactions over the next 50 years, just imagine the change it will make. That's what will happen. That's what will happen. It will have a compounding impact.
Blockchain Innovations and Impact
00:30:22
Speaker
and I think India is a large economy and bringing efficiency in the way economy transacts. It's a huge thing and blockchain is geared to improving and solving that. That's why I'm a firm believer in blockchain. Okay. good So proof of ownership is something which is also called NFT. NFT is essentially a mechanism of establishing proof of ownership. Like today it is proof of ownership of digital goods, but tomorrow NFTs could also be used for, like you said, I have a Gucci t-shirt or for example, I have a degree from IIT. All of this could be NFTs. Yeah, of course these NFTs just, to it's a technology to represent things which are unique, to represent them online.
00:31:17
Speaker
That's all. That's all. I mean, NFT is right. If I own these airports, I own these airports, right? If this information is present online and it's available to whoever I share, it will add a lot of value in terms of, you know, the kind of person I am, what I need, what I want, you know,
00:31:42
Speaker
what all the my personality and what kind of products I might be looking for you know and all of that right so this can to be represented as NFT which I own so and then ah oh and this is just one example I mean right everything that I own I would love to put them online in a privacy protecting manner of course ah ah that's you know and NFTs allow that's a technology which allows people to hold representation of things online you know in a non-fungible manner, you know which means like it cannot be broken up. like This airport cannot be made into half-half. It's just one single piece of airport. so but just one That's the way NFTs work. And it's it's it it a very simple technology. you know Once blockchain is there, once we have excelled at blockchain, NFT is just one of the applications.
00:32:39
Speaker
yeah
00:32:42
Speaker
Okay, okay. um yeah I think one of the challenges right now of doing this as transaction cost and speed, like like as on date, like the speed at which you can do, for example, if I have to pay for a Chai to a Panwari using crypto, it will cost me much more than what the Chai would cost, right? like Yeah, yeah. To Panwari, you can pay with UPI.
00:33:12
Speaker
i yeah okay But you see this getting solved, the transaction cost and speed issues. Oh, yeah, of course. It's already solved. This year it has been solved. I mean, 2024 is the year when we have solved that.
00:33:27
Speaker
yeah okay yeah Cost has gone down. I mean, now the yeah in years from today, I mean, in by 2035, you should be able to see billions of people using blockchain on a daily basis without even realizing it. It's just happening you know and improving their life in one way or another. Yeah.
00:33:48
Speaker
The back-end system, all of these apps that I use are all connected via blockchains. ah Everything that I am doing online is represented by NFTs and Stokers. And using that, my entire web experience and internet experience has been upgraded you know because of these technologies that have started playing a role in the back-end. So I think 10 years is a good time frame in my estimation.
00:34:18
Speaker
one and a half decades, one more decade and ah this will transform things. Yeah. Who will pay for the compute cost and a storage costs? If you're doing so much on the blockchain, then it means high compute costs, high storage costs. Who's going to bear that? Is it going to be ah like per transaction, there'll be some like pennies on the dollar that you will pay? Yeah, I mean, so ah compute cost and storage cost is there even today with UBI also.
00:34:48
Speaker
Right. So, I mean, that's true for any of the, application like the FDR, the merchant discount rate is one way to recover that cost. ah So it will be something similar then like, I think, yeah, and consumers, if you ask me if to speculate and consumers won't pay, but people who are using businesses will end up paying this.
00:35:11
Speaker
Businesses being built using these technologies, you know, will end up paying the compute and storage cost together and consumers won't pay. I think that's how the world will continue to work. it It continues to work even today, you know, that way on internet. I don't think every customer being charged.
00:35:30
Speaker
So any platform that charges customer for transactions, customers don't like that. I've seen this. Customers don't like that, you know especially on day-to-day platforms. you know And then some platform will come which don't charge, and then customers will start using that. And they instead charge the other parties, the businesses. right I mean, I think that will that's a fundamental principle that will continue to hold. So it will continue to be free for customers. but That's what I know. It will be free.
Founding CoinDCX and Overcoming Challenges
00:36:03
Speaker
yeah okay
00:36:06
Speaker
but Okay, so coming back to your journey, so you thought that the way to the way in which you can help India reach that number one position in 75 years is by building something in crypto. ah What next? How did you meet somewhere? How did the two of you start CoinDCX? Tell me about that journey. So Sumit,
00:36:29
Speaker
And I met in Kota when I was searching for a PGE. I went to this this small house and I i took a room, I rented a room there and when I was preparing for IIDJ 11th class, 10th class and there Sumit was used to live already.
00:36:51
Speaker
So that's where we met. You know, that's a long story long and we have been together since. I mean, as friends, you know, he went to Sony, Japan, I was preparing for UPSC. So we kind of went into different paths. And then he was also exploring crypto in 2016-17 just like me and he had good exposure to crypto as well and me and and and I remember one day we were we were chatting on google chat that g i mean gmail chat used to be there earlier it was not whatsapp i mean we used we were chatting on gmail chat
00:37:39
Speaker
and everyone's up and all of that, what, what, what, what are you doing? ka rabbi yasal And crypto, crypto blockchain. And, uh, I think it was a short conversation and next day we started the company. And what was like the idea was to build an exchange. like Yeah. Yeah. Yeah. Because when you're talking about this transactions and economy, assets, you know and the exchange is a very fundamental core part of it. So where will these transactions happen? Ultimately, they have to happen on an exchange where there's some liquidity. In India, i mean of course, exchange plays a very critical role in establishing this industry and establishing this technology, making it mainstream.
00:38:34
Speaker
so It's also a way for people to spend their INR and buy these digital assets. you know So we started with an exchange and and and more importantly for a startup exchange is a very, it's it's a good business, a viable business. It gives you revenue. You know you cannot hope to sustain for 10s and 20s, 20 years without a revenue stream.
00:39:03
Speaker
so Okay, and so tell me the journey.
00:39:09
Speaker
Journey of CoinDCX or? Yes, CoinDCX. So now the two of you decided you want to start so from there. Yeah, actually just the next day we started. Sumit came from Bangalore to Mumbai. I was in Mumbai.
00:39:24
Speaker
And Sumit just came because it was very difficult for me to move. I had my wife, Sumit was unmarried back then. So Sumit just came next day. It was literally the next day, by the way. And we started thinking what to do, how to do, etc. And I was a technologist. Sumit was more ah on the non-technology side of things.
00:39:48
Speaker
And ah from my flat in Mumbai, we just started ah building it up. you know I started coding, ah developing writing piece, writing it from scratch.
00:40:01
Speaker
you know ah and ah And so we just started the rest of the things, ah including fundraising ah in the initial days, as well as ah but well brand etc you know all of these things, non-technical. I started building the exchange itself. I started how to interact with the blockchain, how to build application on the blockchains and how to build an NSE like i had this I had this task of building something like NSE, you know, National Stock Exchange ah ah and and with the added integration of blockchain.
00:40:38
Speaker
right So how to do that? And you are just one person, there is no other person. So that was a very massive problem statement in front of me as well. Sumit had a massive problem statement as well you know of of starting up in a completely new new brand new thing. No one knows and blockchain was still very nascent. How to build a business?
00:40:59
Speaker
It's such an innocent industry where no no one knows you know what is crypto. i mean People get scared of Bitcoin you know so by just listening its name. so i But we did. We did start. I hired a couple of developers ah you know and and we we started building. and We were, uh, we were launching it, you know, in the first week of April in 2018, and we were just about to launch, you know, and things were looking very good. We worked our, we worked our ass off, uh, for ah five, six months, you know, day and night, and we worked really, uh, hard. Then again, I mean, like I told you, the way I prepared for it, the way I.
00:41:46
Speaker
They picked up, worked in dormant technology. I mean, this is is my field. This is what I love. So again, day and night, 15, 20 hours, started building this up six months, worked hard. both All of us worked hard. And then when we were about to launch, RBI came up out of nowhere. And I mean, RBI just came up and said that you cannot have bang bank account.
00:42:14
Speaker
You can run the company, you can do whatever you want, but you cannot have a bank account as a crypto company. Without a bank account, how do you run a company? How do you even pay yourself? How do you even pay salaries? How do you?
00:42:31
Speaker
That was very challenging, very, very challenging situation. We had some investors lined up, you know almost 8 to 10 cook set of investors. I mean, we had really good set of angel investors lined up, you know, more than half of them backed out. And we can't blame them, you know. I mean, the central bank of the... I'm surprised that only half backed out. ah I thought it could be 100% back out. Yeah, there are some
00:43:03
Speaker
great minds and great people you know who exist and who are ready to take that risk and who have a long term. I mean, people who are in this industry for short term, they banked out and and that's fine. you know They will always back out because ah they have their long term skin in some other industry. But in this industry, they are here for because you know I mean, monetary gains or some other gains.
00:43:25
Speaker
ah So it it makes sense for them to back out and knock not take that amount of risk. But for kind of investors who are deeper into this, who are day and night living and breathing this, for them it will make sense to just take this risk. So those stayed um they did and rest of the people didn't stay. And people who stayed, they are with us stupid today. And thanks to them, you know we were able to raise this initial funding now, I feel. yeah But it caused a lot of lot of issues.
00:43:55
Speaker
It caused a lot of issues. But but I think it was a two years ban, right? This RBI ban lasted for about two years. it It lasted for about two years and we didn't have funds. I even had to borrow funds from my father, you know, ah and in between.
00:44:15
Speaker
Uh, I borrowed a couple, I mean, 20, 30 lakhs from my father just to pay one to month salaries, you know, to the employees, because we didn't have the, even our funding angel funding out seat funding round was over, you know, money was over. We didn't have anything in the bank account. Uh, and, and then I borrowed money from my father, uh, returned him back to it.
00:44:39
Speaker
later. i mean But yeah, so that was very challenging. And we had this option of closing the company, you know, that was easy. Believe me, and out of 199 crypto companies, they they shut it off. People just shut it off. yeah We continue. We continue building and we
00:45:02
Speaker
Yeah. So we build newer products, products which didn't require bank accounts. So what if we cannot have bank accounts will build products that don't need bank accounts, you know, and go yeah. I mean, that for example, ah most of the products were where people buy from INR, you know, crypto from INR.
00:45:24
Speaker
already a lot of Indians had crypto. So we build products such that people don't need to deposit iron. They can deposit crypto and use crypto and they can transact within crypto and build products for people who already hold crypto. They don't need to bring in newer money you know and new iron. So we thought we'll build wrong for them. It's okay. I mean, India will have at least thousand crore worth of crypto, right? From this thousand crore will capture the market and we'll build for that. That's fine. Because in the long run,
00:45:55
Speaker
This industry is going to be there, irrespective of whether RBI bans it or not, and whatever happens. I mean, sure, a few countries banned internet also, you know, back then.
00:46:09
Speaker
That does not mean that internet is is it's a very powerful force. you cannot Even if you ban it, it won't matter. You have banned it because probably, of course, there are some regulatory issues. right And ah we're not able to deal with them. And and and and that's why we have taken that step. and That's fine. ah We will probably understand it over time. As a country, we'll develop more skills and understand it better. That was the leap of faith. And and we just... or Yeah.
00:46:38
Speaker
that That's how we continued. Till 2020, the ban was lifted. So till 2020, you were not earning any INR. Your earning was just in crypto because you were doing crypto to crypto exchange. So your commission in that would have also been in crypto only. Yes. And so how did you pay salaries? like How did you run? That was from from ah funding, from investments.
00:47:06
Speaker
Because by 2020, we had raised Series A also. right so And how did how did that happen with with this kind of a shadow ban in place? And like I told you, there are investors who believe in this industry for the long run.
00:47:20
Speaker
you know And they they know it for a fact that ah countries will oppose, countries will have this problem, but eventually it will all get sorted out as long as you have the capital to survive. So you have these kind of people and these kind of people are responsible for the growth of this industry. right So I mean, thanks to them.
00:47:41
Speaker
and yeah so we meet It was not easy but because we have we had a functioning product without INR also right and we had some revenue so we were able to raise funds and at the same time ah ah there was this idea of If we cannot have a bank account, why not let people transfer their INR from one person to another and just transact amongst themselves, something like that. That was also peer to It's legality was in question, but the yeah, so we tried something with that as well.
00:48:15
Speaker
ah like So we tried everything, we tried that we tried whatever could work you know and and whatever could make us survive, we or like expanding internationally and we did successfully. ah We onboarded 1.5 lakh customers from other markets as well you know and we started a revenue stream. ah So yeah, it was very challenging, but but yeah, we did. Please like a mention.
00:48:42
Speaker
Yeah. The foreign customers are also for the same crypto to crypto product, like no fiat currency. Yes. Yes. No fiat currencies. Okay. Okay. Okay. And but were you part of that court case, which was being fought against the ban?
00:49:00
Speaker
Yeah, so RBI had to leave the bank because Supreme Court ordered it you know ah in 2020 and there were four exchanges part of that a case against the Reserve Bank of India, which these four players collectively won and going to six was a major part of that as well. Yeah. Okay.
00:49:17
Speaker
we We really didn't believe you know that when when the ruling happened, i mean we were like very happy. We were not able to believe like what happened. in ah We got the bank account. you know After that, after two years, three years of struggle, ah we got the bank account and it it coincided with it coincided with this massive bull run which happened in 2020-21.
00:49:45
Speaker
and Yeah, we acquired one crore customers from India in a matter of nine months. Well. how did you So you had an exchange. So from running an exchange, you must have had to learn how to acquire customers within India forfe with the fiat in place and the KYC norms in place and things like that. How did you figure all of that out? and you know You must have had to learn marketing also. and ah Just tell me about that journey of like how you acquired one crore customers, what worked for you, or was it just that there was so much demand and
00:50:25
Speaker
Yeah, in in in this industry, most of the acquisition happens when the prices go up. And a lot of it is also you know organic. A lot of it is organic. you depend like Irrespective of the money you spend on the marketing, if you're spending in the beer market, nothing will happen. You don't know no customers. You won't be able to acquire customers.
00:50:44
Speaker
On the other hand, it's just 10x when it comes to, when it when it's a bull run and you are able to acquire so so many customers much, much faster. So we spent money, know we spent with it our TV advertisements, et cetera, during the bull run and a lot of brand activities, a lot of referral program, you know and also ah but yeah influencers program with in influencers and k key opinion leaders, KOLs, Instagram accounts and all of that. So yeah, I mean, ah standard marketing playbook, nothing unusual about it. ah But yeah, so that was a period when we I think that was a period that established that CoinD6 is the largest exchange in India and the biggest exchange in India, the most
00:51:36
Speaker
the best exchange when it comes to the technology as well. ah right That's when we established all of this in the market in terms of number of users, in terms of products, everything.
Technical Infrastructure of CoinDCX
00:51:48
Speaker
And that's the time I think when we clearly, clearly set ourselves apart.
00:51:53
Speaker
yeah How does a crypto exchange work? And I believe there are like different terminologies here. If you can just explain that like there is a bookmaking or something in this. So just from a slightly more technical perspective, how does an exchange work?
00:52:12
Speaker
See crypto exchange and running a crypto exchange is a very difficult job because it has so many moving parts, so many moving parts. Most of the typical startups have like five departments. We have 25 departments. I mean, we have so many departments with us. 25 is a high number to give you an exact count. We have around 16 to 17 departments. That's a very high number compared to five, six, seven.
00:52:41
Speaker
Because cryptocurrency exchanges has so many moving parts, so many things. I'll give you a few examples. ah Technically speaking, of course, you have an exchange, you know, ah which is an order book. ah Order book is a, you know, so It's like an exchange, NSE. For example, it it matches the order ah on the basis of price-time priority matching algorithm, you which means orders will get preference, which have orders having better price will get a preference over others. you know And then if there are two orders with same price, then the order which came first will get the preference. So that's a price-time priority matching algorithm.
00:53:32
Speaker
We build that in in in a lower level programming language, which is C++ plus plus to give us a throughput of 2,000,000 orders per second processing capability. right so Because action is that well but you you need to be able to support algorithmic trading as well, HFT and high frequency trading. You cannot build these such applications on Node.js or Python, you know these kind of languages. You need to use lower level programming languages, which are efficient in computations. We built this on C++. plus plus Then there are, of course, so many in terms of technology, there are so many systems. I mean, we have we have more than we have roughly. More than 100 microservices, we have 125 to 150 microservices in the back and collectively delivering this mammoth infrastructure and how give you some examples.
00:54:20
Speaker
Sorry, off the mic. Yeah, I mean, see, there is order book. You know you need to update order book every second. ah ah You need to be updating order book every second you know and and send all of those updates to the to your mobile clients, to your web clients. And then some clients are on lower internet connection. So you don't update every second. You update every five seconds for them, eight all of these logics. Then ah there is a trade history. The market trade is happening.
00:54:47
Speaker
right ah CoinDCX processes 70% of the global trades on its backend because CoinDCX allows you to access 70% of the global liquidity you know ah from its interfaces. So you can imagine it's billions of trades every day happening and we process all of that data.
00:55:13
Speaker
you know We process that data, make sense of ah build charts from it in the real time, deliver those charts to the clients, get trades from it in the real time, get prices from it in the real time, deliver all of that to the mobile and and web clients and all of that. So it's a very large scale infrastructure.
00:55:33
Speaker
And then you have to process orders. you know There are incoming orders ah from APIs high frequency. You've you've got lakhs of orders every minute. So how do you process them? How do you put risks risk checks on them? How do you do compliance checks on them? How do you do you know ah so those services for them?
00:55:55
Speaker
then the but then you have infrastructure which is interacting with the blockchains you know for processing deposits and withdrawals and reading all the blockchain transactions globally. right that's Again, that's a separate infrastructure in itself, ah which is again responsible for processing lakhs of transactions every every minute.
00:56:14
Speaker
you know so and and and and and and just and Looking at it and seeing if any of our users are also making transactions on blockchain and then recording them in the system and then reflecting in customer portfolios. that's a And and you need to be you need to build systems such that you can interact with hundreds of different blockchains out there, you know not just one blockchain. So ah how do you build those systems which interact with blockchains you know and and and learn to read and and systems capable of ah reading and writing on these blockchains.
00:56:51
Speaker
and And these are very large scale blockchains, right? So how do you build those? Those are other other systems. Then there are systems for, of course, like KYC and compliance checks, all of that. There are systems for them.
00:57:04
Speaker
then there are ah ah fund operations, well, you know, because customers have, I mean, CoinDCX, it's public, we have around 450 million dollars in assets, you know, of customers that is 3500 crore. You know, how do you secure them? How do you secure 3500 crore on your backend?
00:57:28
Speaker
oh So, there are systems for that. you know Massive systems to secure these and wallets as well. How do you... CoinDCX has a very large security team, almost 25 people in security team. For a 500 member team, 25 people in security is very large because we hold these assets, right?
Simplifying Blockchain with Octo
00:57:54
Speaker
anding so There are so many systems just meant for improving the security posture of the company. right ah so yeah I can go on and on. Each of the largest scale systems that I mentioned have multiple services inside them to do specific jobs and tasks. This is the system then in terms of ah departments we have One of the big department in the companies, also operations, you know, there are a lot of operations, liquidity related operations, you have to run the markets 24 seven. Right. So you need, uh, you need, uh, to have a team, which is 24 seven 365 days, you know, and, uh, if, if you need minimum one person for a job for three 65 days, 24 seven, you need to have five employees for that.
00:58:47
Speaker
yeah because in our holidays, day shift, night shift. But if you want to ensure that at least one person is there for that particular job, 24-73-65, you need to have five people. That's the standard metric, industry metric. So you know we have operations team able to achieve all of this. ah Then with so many different operations, compliance operations, ah we need to scrutinize each and every transaction basis, the PMLA guidelines.
00:59:12
Speaker
like And and every incoming and outgoing transactions need to be scrutinized. ah If there are red flags, then it needs to be done manually by compliance analyst team. right And so there are like 10 sub functions within the operations team. So for operations team is very large.
00:59:30
Speaker
know but ah Yeah, so that's another thing then of course you need to have a very strong brand and marketing team because People need to trust people are holding their life earnings and savings on the platform, right? So you cannot just You cannot be a low quality when it comes to communications and when it comes to you know, your brand image ah People are holding money. So you need to realize that so you're very strong brand and ah Communications team as well, right and that's a very important part. I would say right so yeah ah that and
01:00:10
Speaker
Our compliance team is very large actually because it's ah's it's it's even more difficult to job than a bank you know because banking is still regulated and they know what to do. We don't even know what to do because we don't have guidelines. We don't have clear-cut regulations that you need to do ABC. We have to create ABC and then do it. ah No one tells us to do ABC.
01:00:30
Speaker
So yeah large large compliance team and within compliance we have four sub-departments. Similarly, within security we have four sub-departments. And then there are different kind of, you know ah yeah but we have a web 3D because ah ah now
01:00:56
Speaker
One is the exchange part, know ah where customers buy and sell. But now, ah like I told you, within one decade, billions of people will be using blockchains right without even realizing it. So applications are being built on top of blockchain. An eventual goal is that a lot of Indian applications must be should start using blockchain behind the scenes. So you need you need to build infrastructure that is responsible for making this happen.
01:01:24
Speaker
Blockchain is a very difficult technology. We understand it. But all these Indian companies, all these mobile apps in India, they are not going to learn everything that we have learned over the last six years. That's a very steep learning curve. So we are building and technology, product, ah processes, s SOPs, everything ah such that these companies can start using blockchain. like That's our Web3 vertical. So that's another ah large team that we have. The product's name is Octo.
01:01:57
Speaker
So Octo is is a platform which allows any any company in India to start using blockchains for their needs yeah in a matter of one week. you know i If they do it without Octo, it will take like six months for them to just learn everything, allocate four or five developers, they will learn for six months and then deliver something. On the other hand, it just takes one week, you know just integrate out of the box and you are able to do just that.
01:02:23
Speaker
use blockchain for everything that you want. You know you just need one developer. I think it will cut short the time and that's very important to step that needs to be done. So this is another team which works, you know. Yes, and then there are the smaller teams as well, you know, five, five people, six, six people, many of them, right. Fundamentally an exchange is where people are coming with some sort of an order, either I want to sell or I want to buy. And the role of the exchange is to match orders. Someone says I want to sell Dogecoin and buy Ethereum. Someone says I want to
01:02:57
Speaker
ah sell Ethereum and buy Dogecoin. And so the exchange does the matching. ah What if ah there is not enough? ah ah What if the match doesn't exist? Like one of your customers wants to sell Ethereum and buy Dogecoin, but there's nobody who's selling Dogecoin. Like there's no customer of yours who's selling Dogecoin. What happens then? That's what we solve.
01:03:23
Speaker
That was the problem which existed in the market when CoinD6 was not there. But when CoinD6 came into picture, like I told you, ah we allow, we allow customers through excess liquidity of 70, like 70% liquidity, global liquidity, you know. And even if there is no seller or buyer on the platform, we have the ability to route those orders wherever there is liquidity.
01:03:52
Speaker
So for example, you would be integrated with a Binance and you can execute the order. Multiple pools, multiple liquidity pools. We have also like integrated with decentralized finance for that matter, which is oh you know and another upcoming market. So not just Binance, decentralized finance, Kucoin, Binance. I mean, whenever we see there is a huge liquidity pool, we just integrate it onto the platform.
01:04:16
Speaker
Yeah. So, okay. Okay. Okay. Okay. understood okay Okay. That's a power. Okay. Okay. And you know, for a customer who comes to the platform, so does he need to have his own wallet? Because wallet is one of those slightly technical things. Uh, like if you have to set up your own wallet and all that. So how does that happen? and ah Okay. So we, we use, uh, we use multiple technologies to make that journey simple. Right. Uh, people simply.
01:04:46
Speaker
just need to know their email and phone number. That's all. I mean, we have solved all of that already. People who want to set up and go by the complex. root of seed phrase and you know like typically establish setting up a Web3 wallet, it takes it it needs you to know this concept of seed phrase. it's so It's a technical concept, you know seed phrase. and and And if you're okay to learn all of those concepts, then you have that option as well. But if you just have email, you should be able to explore Web3 and blockchain.
01:05:16
Speaker
so that's what i mean because we don't We believe that mass adoption of this technology is going to happen via email and phone numbers only as identifiers, not via something else, you know not via private keys. I don't know if you know what is a private key, but it's like a 32 character string of of of alphabets and letters, you know which is yeah this is the password to your wallet. So generally, ah people just keep it printed somewhere and keep it written somewhere so that they don't forget it but that's not you know how mass adoption will happen so I mean we have eliminated we have removed all those complexities long ago and say technology is there if you only get adopted when we it simple
01:06:00
Speaker
um Is there portability between exchanges? You know, like, say, UPI, I can use any app I want to for UPI. I'm not restricted to any one app. Though if I want to use any bank, then there is slightly more friction if I want to, because I have to close a bank account in one place and then transfer money to another account and do an account opening at the other place. So what is what is the level of portability in crypto?
01:06:27
Speaker
So portability is coming up in exchanges, it's not there, but in wallets like Octo, it's there. So now Web 3 portability is there on blockchains. Imherently, blockchains have portability and much, much, much more than by default, by technology itself is built in that way that it's highly portable. Your accounts on Your account is on blockchain. It does not ah matter which client you are using to access that blockchain. right So you can always port your assets from one application to another because it's just like your assets are with NHDL and CDSL. So it does not matter which broker you are using.
01:07:19
Speaker
right Similarly, all your assets are on the blockchain. It does not matter where, whether you know you are using which client. So portability fundamentally is there, but in the exchanges, it's not there because exchanges are off of blockchains. You know, we do all this matching, not on blockchains, but like I mentioned,
01:07:42
Speaker
our web3 vertical which is Octo. So all the customers of Octo are part of this portability because Octo is built on blockchains. I mean the assets on Octo are directly held on blockchain. right So it that that system is all portable and that is the, I mean
01:08:02
Speaker
Maybe I can spend one minute in explaining the rationale here. So we started as an exchange, but blockchain was only used to receive and send assets. Once you deposit assets on CoinDCX, all those assets are held in a common blockchain account, which is owned by CoinDCX. And all the things happen, then blockchain you don't need blockchain. Then all the things happen without the use of blockchain. Once you deposit assets to CoinDCX.
01:08:33
Speaker
And everything happens on your AWS servers is standard. like But this is not going to remain this way. It's going to change where all the assets will continue to remain on blockchain. Every customer will have a direct account on blockchain and all the applications will be built on blockchain. So that is what is going to happen because earlier but performing transactions on blockchain was very costly.
01:09:01
Speaker
So just imagine when you are doing exchange, when you are doing exchange and every transition costing like $10. So that was not a good way, right? That's why blockchain was only used to receive and send assets earlier.
01:09:18
Speaker
because there you can pay some price, but exchange, which is a very high, you know, like of transactions happening every minute that used to happen on your general AWS servers. Now, now, because the cost has gone down, blockchain transaction cost has gone significantly ridiculously down, like it is less than a cent now, less than one cent.
01:09:42
Speaker
So now all these transactions are happening on blockchain directly. Even the exchange is happening on blockchain directly from one account to another account directly. And you are, you don't need separate systems for exchange, right? So all these, so if you are using applications built on directly, these blockchain systems, then your account is portable.
01:10:08
Speaker
And now all the systems and will eventually of course be replaced by these blockchains directly. So even CoinDCX backend will eventually be replaced by this blockchain directly. you know So customers, every customer of CoinDCX will have a portable account in the future. And what is the how soon will this happen according to you? We have already built the technology which is Octo.
01:10:37
Speaker
Now to facilitate facilitate this transition, we're integrating inside this inside CoinDCX now. Give me some examples of who's using Octo. So you said you built Octo for developers. Can you help me understand this a little more? Maybe give me an analog analogy of, ah is this like, say, AWS? Or what what is it like that? Or is it like a payment gateway?
01:11:06
Speaker
Uh, you know, like a razor pay enables companies to collect payments. So is this like that or what is optimal? Like help me understand. So it's, it's, it's more like AWS, AWS is a software layer on top of actual hardware computers. So there are like lacks of computers.
01:11:28
Speaker
you know, lying in data centers, and then there is a software layer to access the computing power and computing and storage power of those computers, right? That's AWS. Correct. What Octo is, there is a computing and storage power available with the blockchains.
01:11:54
Speaker
To use those, to use them, Octo is the software layer on top of that. It's a middleware between that computing and storage power that blockchains offer you. And this is programmable storage, programmable computing. right It is different kind of computing. ah It's built for transactions. It's built for ownership, <unk> etc. me So you can use all of that.
01:12:22
Speaker
going via Octo, right? It is similar to when in 1990s, people used to host their websites on their own machines using the, you know, and it was complex, but then it came AWS and you use AWS software to use the raw bare metal servers. Similarly, if you were to today directly build on blockchains, it is like building on your own machines and establishing web servers on your own machines.
01:12:53
Speaker
But with Octo, it is like and AWS, where you don't need to you know do that unnecessary hard work. And and and the same work will be repeated by all the developers. Instead, why not just one company do that same work and let all the developers not repeat the same unnecessary work you know of stitching things together?
01:13:16
Speaker
right so ah It's like that. So that is basically Octo, but it's for blockchain technology. Okay, so you built these microservices which you were giving me examples of like updating on chain or updating wallet or capturing data or presenting data from the blockchain. So all of these microservices I assume have ah come together to and you have made them available to any company now, like the the microservices that were built. for Those microservices were just an example that vote that those actually were for CoinDCX product.
01:13:53
Speaker
For Octo, it is very different. Octo is much, much deeper, you know not just reading, writing, but also orchestration of transactions. right For example, there are tens of blockchains and behind the scenes. So a developer needs to you know and write on multiple blockchains. They have to write different kinds of codes. Because every blockchain is built by a different company. There is no standard ah you know but a method of writing data on the blockchain, moving assets from one address to another address, you know transacting assets.
01:14:30
Speaker
On one blockchain and on another blockchain, it's like day and night, very different. So a developer developing an application need to not only learn but implement all these things for different blockchains, you know, ah again and again. So Octo allows you to just give one command and then Octo will orchestrate. It does not matter what kind of standards and protocols are being used by different blockchains.
01:14:55
Speaker
you you give you want to do this transaction, then rest you don't worry about it. It will happen on the chain. You don't have to worry about it. right So in future applications will use ah you know multiple things. i mean multiple blockchains. One application will be built by, will be using multiple blockchains behind the scenes and multiple ah protocols behind the scenes, right? So if you don't have this kind of a middleware layer and you directly build on that, you know, on those, then it's very complex. So Octo orchestrates all of this. So it's it's much more, I mean. What microservices i I described earlier, they are just for running the centralized CoinDCX exchange, right? This is a different beast altogether.
01:15:38
Speaker
i mean This is what's more complex and it has different kinds of microservices, different kinds of teams, ah you know, ah data teams, transaction team, ah experience team, orchestration team and it's a different kind of setup altogether.
01:15:55
Speaker
ah Give me some use cases, examples of orchestration. Like you said, orchestration is a complicated problem, which you have simplified. You have abstracted that problem for developers. So give me some examples of what projects are using Okta for orchestration and how you have simplified the orchestration. Think of a gaming company you know that is using NFTs for storing assets of gamers, right?
01:16:22
Speaker
Now those gamers, now this gaming company is, suppose this is built on Solana blockchain. So these assets are being hold held on Solana blockchains, right? But imagine these gamers, I e as a gamer, have my other assets on a different blockchain, on polygon blockchain, for example. Now, if I were to start using this game, my assets are there on polygon.
01:16:53
Speaker
How do I, how do I, you know, like I don't, as a customer, I don't care about whether I'm from polygon and this gaming company is built on Solana. So I have to move these assets, right? I don't, on the other hand, the developers of this gaming company, they don't want to learn polygon and 10 other chains for that matter to make this happen, to make this customer interact with, with the, with their game, right?
01:17:21
Speaker
So they just want to be to just send one command which allows assets of this person you know on polygon to be used for the purpose of their game in whatever function that they have, whatever intent that they have you know on on the on the platform. This transaction alone requires like five, six transactions, subtransactions. So making this happen is a very complex thing.
01:17:51
Speaker
right So o october that so yeah if a gaming company has assets on Solana, like say a skin, like I bought a custom skin for a player, um why would someone come with assets from another blockchain? like I'm not clear of the problem of statement here. Because and you you might be a skin, right? But there is there might you you may have some stable coin.
01:18:21
Speaker
Just imagine, you you may have some assets. So yeah i said buy was asset you you are... Yeah, you are buying skills, you are buying, selling skills, right? at Some other game, you are on some other game and you sold your one, right? And you sold your skin there in that game and now you have some assets on your wallet. Now you won't want to use those same assets, right? ah Now you don't care whether the other game is a Solana and and it's not that you you cannot play games which are on Solana because you are from polygon ecosystem. That's not how it will work.
01:18:51
Speaker
right yeah good but okay okay yeah okay now no the plus game developer they cannot They cannot make this happen. It's very complex. It's very, very complex to just make this transaction happen. And this is one basics, the most simplest use case.
01:19:08
Speaker
There are use cases where one click of user will entail performing 10 transactions behind the scenes. It gets locked because imagine there is also identity involved. and Identities on third chain because it's not that typically identity will have like one chain or two or three chains will serve the entire globe, you know, when it comes to identity.
01:19:30
Speaker
something like that. The identity is on a different chain altogether and the company and the application has to perform some actions based on the identity of the per person. right So now they have to integrate and learn on another chain and all those protocols of that chain to integrate identity. So it's very, it just, it as the complexity grows, it becomes a nightmare. Suppose there is a very large company and they have so much throughput that not a single blockchain cannot handle their throughputs.
01:20:00
Speaker
right And they want to build their application on five different blockchains just to load balance. That's another example where something like orchestration and JNAP like Octo comes into picture. we we We are seeing this. Octo has a massive pipeline of ah developers and companies they want to integrate. and and And frankly, we are not able to just keep up with that base of customer demand.
01:20:28
Speaker
And this is domestic or international customer demand? How do how do you monetize October? Right now we are not. Later on we'll charge on transactions.
01:20:40
Speaker
Like number of API calls or something like that. Oh no, transactions on chain. Okay. Number of on-chain transactions. Like the number of times you're writing on-chain based on that. Take it 20% cut. Take it 20% cut off the transaction piece.
01:20:56
Speaker
ah You spoke of identity on blockchain. but What does that mean? Identity on blockchain. Identity means my entire data, right? Like the identity of tomorrow, 20-30 years down the line, identity will not be Adarkar and Pankar.
Business Model and Future Insights
01:21:14
Speaker
Identity will be what I do, what ah what degrees I have, what I own, what do I buy, all of that.
01:21:22
Speaker
data on the blockchain, hundreds of line items as forming my identity, you know having digital presence, but under my control, not that it's visible to everyone, but I can give this data to anyone that I want.
01:21:36
Speaker
as a person. So that is that is what I say my identity you know and and this is this you know ah ah a company should be able to serve me much much much better you know with all that data if I am willing to give my data and share data ah for some to some application for some benefit etc right so I think that's what I mean by identity. Now identity becomes programmable here as soon as it comes on blockchain. That's an asset. Identity is also an asset.
01:22:05
Speaker
right to digital asset. Right, right, right, right. Yeah. Identity means what games I play. Hmm. Okay. Let me just wrap up by understanding the business of CoinDCX a little more. So is CoinDCX a profitable business? ah Like, you know, do you make profit after tax today or what? what And you know, so and I'm assuming your revenue is like a margin on every transaction, some margin you would keep. Yeah.
01:22:38
Speaker
I mean, we we make money, right? But ah in beer market, it's a different situation. In bull market, it's a different situation. So typically, typically in beer market, ah ah you didn't you don't make as much money. In bull markets, you make as much money, and then you know both kind of equalize over the long run.
01:22:58
Speaker
but ah yeah so That's how it works. I cannot give you more exact details of the profitability, et cetera. But just to give you relative things, you know, bull markets are where you make money and bear market is where you lose money. And we've seen that happening across. I mean, you can look at Coinbase numbers. Those are public Coinbase is a publicly listed company. So they lose money in bear market and they make money in bull market. OK. And I think you've raised about 250 million roughly till date, right? Yeah.
01:23:31
Speaker
with the the most recent series D happened in 22. So do you intend to raise more capital or like are you capitalized enough and you have a enough of a runway and no need for. for we have been up fundraise yeah we know but We are not planning anything as of now, but things change very fast in this industry, right? So you don't know, but as as of now, it's not on our priority to raise funds. Not yeah on our priority to raise funds at this moment, not at all. Right now we are focusing on building and building more foundational business so that
01:24:09
Speaker
We can survive forever and make that impact. Okay. In the long term, do you see the exchange as the primary driver of revenue or ah you know the orchestration services like the opto business as the primary or which will contribute? I think exchange is a business. An orchestration layer is a service.
01:24:34
Speaker
ah i think
01:24:38
Speaker
It's hard to say. It's hard to say because even exchange will shift on the orchestration layer eventually.
01:24:47
Speaker
That's what I mean. Even the exchange will start operating on the blockchain via the orchestration layer eventually speaking, you know, eventually down the line. So it's hard to say. Yeah, like that.
01:25:02
Speaker
And Uniswap is an exchange which is accessible via Octop orchestration. you know So ah it's hard to say what will the revenue split and because ultimately exchange will work via ah this layer that we have built internally.
01:25:22
Speaker
and it depends on the kind of business model we are able to build, the external people who are starting to use this orchestra our Octo ah you know platform ah and what would be the revenue model there. ah It's going to have more number of users for sure. The orchestration layer, it will have 50 million, 200 million users.
01:25:47
Speaker
next few years while exchange will have lesser number of users you know so but I mean so it's hard to say frankly but the even the revenue is split. What is the revenue impact of the exchange moving on to the blockchain like if it becomes a decentralized exchange like a Uniswap? Not much does the revenue like not much because exchange charges Customers not on the basis of the cost but on the basis of what customers are willing to pay you know That's the exchange business everywhere across the globe so when exchange moves on ah Decentralized finance basically no defy The costs go low
01:26:35
Speaker
Ultimately, only then it will make sense for an exchange to shift to a decentralized finance via orchestration via Octo and via Web3, right. Shift its backend on blockchain, basically, exchange shifting its backend on blockchain. That will happen when there is a cost advantage of shifting or making the shift happen.
01:26:58
Speaker
And a few years down the line, it will be so. But I think overall, net revenue will should increase. Only then, such infrastructure decisions are taken. So net revenue should increase because keeping the customer ah take rates same. If your cost is coming down, then your revenue will increase. But in the long run, there is also going to be more competition. So that can impact how much you can charge to the customers. So yeah.
01:27:29
Speaker
Okay. Like you said, eventually nobody likes to pay a take rate. So that kind of, ah yeah. So prices are going to come down with time.
01:27:43
Speaker
How is your take rate calculated? like Is it, so suppose I'm buying 100 rupees worth of cryptocurrency, so ah do you charge me 101 or do you give me 99 rupees worth of cryptocurrency? yeah How does that get calculated? It's different for different kind of products actually. Both happen. Sometimes we charge extra and sometimes we deduct it from ah and it also depends on order types as well sometimes so it's different for different products it's not the same concept always because sometimes you're simply not able to do it charge extra sometimes you have the margin to charge extra and so many factors are dependent it's not like one same thing yeah especially when there is a sell order ah then
01:28:36
Speaker
It's difficult to charge extra from ah some other, you know, suppose you have Bitcoin, one lakh rupees worth of Bitcoin and you don't have any other balance, you know.
01:28:48
Speaker
then the only way for you to charge is to deduct some Bitcoin or deduct some money when you receive ah the sell amount you know from ah the entire Bitcoin sold. it's So I mean, it's sometimes possible and sometimes it's not possible. And in in in a buy order, it's different. In a buy order, you have 100 rupees and you can place order for 99 and charge x one Okay. Okay. Okay. Okay. You said different products have different. So what all products are there besides the exchange? Yeah, we have spot markets, futures market, right? Different markets are there and we have lending and I mean, earn people can earn passive. Suppose you're holding Bitcoin.
01:29:31
Speaker
then you can earn 2-3%, 4% up to 10% also depending on what you are holding passive yield and passive income. is taking you know You can could take participation in securing blockchains via these staking mechanisms and not going deeper into that but if you are holding Ethereum then you can earn 4% on that. you know Yield, Metabata.
01:29:52
Speaker
so that product and then Octo of course we have, right ah then we have margin trading, lending borrowing, multiple products are there. I mean entire financial ecosystem basically, yeah. yeah that's what sets That's what sets us apart from other other players also. Most of the other players have just one product which is spot buying and selling. Point DCX is like 10 products.
01:30:18
Speaker
Okay, okay. Is there also like a passive investment product like you know you have SIP the SIP product in typical mutual fund kind of a format?
01:30:31
Speaker
Yeah, like I told you there is passive bond product where you can just load your money and keep it and it gives you returns. But on crypto, not on INR. For staking. Yeah, for staking. Not on INR.
01:30:46
Speaker
okay Okay, so let me end with this. Do you have any advice for future crypto founders, the young people who are listening to this show? Yeah, I think exchange people should not start exchanges etc. It's a saturated space right that will be a mistake. ah But rather focus on building applications and customer applications and consumer applications built on blockchain. That's the new wave. you know And that that's what needs to be done also.
01:31:16
Speaker
So that will be the only advice. Use blockchains to build amazing customer experiences, build better applications, mobile applications, you which are powered by blockchain. I think there's a huge advantage there. so that will be the only Any specific ideas so that you know are that you think are good ideas to build on, like in terms of improving customer experience through blockchain?
01:31:41
Speaker
Oh, yes. Yes. So there are multiple, multiple ideas. I mean, if you are building ah any social application, any gaming applications, right? If you are ah building any, any applications, one of the bigger idea is also identity. I mean, that's still not solved yet. ah You have to identities are still complex, ah not KYC, not your typical, but ah but also yeah capturing the entire digital footprint and and and presenting that you know and and putting that in the customer's custody, you know ah not not somewhere online but customer's custody and and allowing that to allowing the customer to share that with but the companies. you know
01:32:25
Speaker
such that ah these companies can then give better experiences to the customers ah because now they have, now this is the ah customer's permission, they have but finer and minor details of what the customer is, you know and they can ah give better experience. This is one idea, for example, just on the top of my head. Yeah. Awesome.
Conclusion and Audience Engagement
01:32:49
Speaker
Thank you so much for your time, Neeraj. Okay. Thank you so much, Akshay.
01:32:56
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to this show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in this show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.