BNB Chain recently had the honor of sitting down with Alex Lee, founder of Wombat Exchange, to talk about his dApp and his journey from Web2 to Web3.
Wombat is a decentralized exchange (DEX) built natively on the BNB Chain that uses an automated market maker (AMM) to facilitate the buying and selling of cryptocurrencies with like-characteristics – namely, stablecoins. Wombat employs a new stable-swap focused algorithm that enables the Wombat DEX to be more scalable and cheaper than other leading stable coin DEXs.
Below is a recap of our conversation (edited for length and clarity).
Where did you grow up and go to school? Tell us a little bit about your area of study and subsequent work experience.
I was born in Hong Kong and left when I was one year old. I grew up in Vancouver and spent most of my life in Canada, snowboarding and playing hockey. Typical Canadian stuff.
In high school I fell in love with Math and I was thinking ‘Oh, what am I going to do with Math?’ At first I thought I would be a Math teacher but then I saw that I could use math to become an actuary, so I went to Waterloo University for that.
During the course of my studies I found being an actuary wasn’t that interesting and at the time my roommate had done an internship at a hedge fund and made a lot of money there so I thought that would be cooler. After graduation, I worked as a quant trader but after four or five years doing that it wasn’t really as cool as I thought – it was really kind of mundane in my opinion.
Then I became a software engineer and after that a blockchain engineer at a couple of pretty big foundations and companies. Somewhere in the middle of that I did my masters in Computer Science at the University of Hong Kong while I was working – it’s very applicable to the world of crypto.
How did you become aware of crypto?
My journey to crypto started in 2016/2017 but it was really during the QuadrigaCX blow up that made a lot of people, including me, ask why people were losing so much money with a centralized exchange. That really turned me on to the promise of Ethereum, which is decentralized, where people have direct control of their finances. And Vitalik is from Canada and went to Waterloo too, so, you know, he’s my guy. The Canadian connection. He just came in to build and fix whatever he thought was an issue. To me, that’s the ethos builders in crypto should follow.
How did you transition into crypto?
I started out by helping other projects with fundraising, tech reviews and tokenomics. And it just became very natural for me to just be like, ‘oh, hey, let me do it myself.’ And I think that's really how I made the transition.
What inspired you to build your dApp?
My grandparents ran away from the Cambodian genocide and basically had all their assets taken from them. If DeFi was available to them at the time, their assets wouldn’t be taken away. And if you look around the world, all of this stuff is still happening. So many people in the world are still fighting corrupt regimes.
I really believe in DeFi – having a place that is truly non custodial where we remove all the problems of centralized exchanges. Basically, we have a system where, for the first time in human history, we can actually remove trust and people can have direct control over their own finances.
What was the biggest challenge you faced in transitioning from Web2 to Web3?
One of the things that every developer or every builder in this space, whether you're a founder or part of a project, is always afraid of is the security of their protocol. Having a project that can handle over 100 million, 200 million, 1 billion TVL is very different from some random project just deploying. The cool thing about crypto is anybody can do it. But it also opens the door to a lot of bad actors out there trying to hack.
A lot of the other challenges in making the transition are getting your name out there, finding good developers to work with, and figuring out where to build and what tools to use.
What is the major problem your dApp is solving? What innovation did you develop to differentiate your project from the competition?
Other AMMs like Bancor and Curve are pretty complex and that makes the onboarding process very hard for new Web3 users. Wombat was able to simplify the whole experience to make adoption really easy.
We also solved a lot of capital efficiency issues and that’s something we’re really proud of. Recently we did around 200 million transactions in a 24 hour period which is actually more volume than Curve, which is a really big milestone for our team. Our algorithm is also written to protect against people draining our token pools, which came about from the Luna incident.
As a decentralized AMM, we have no trusted intermediaries. Code is law.
What are the major differences in developing for Web3 vs. Web2? What’s better about it and what’s worse?
In Web3 security is kind of the main pain point because everyone's going to try and hack you. That's a really big difference. In Web2 a lot of hacks are stealing your identity. In crypto, hacks are people directly stealing your money.
Dev cycles are much faster in Web3. And, in Web3 no one cares about anything other than results and performance. You just have to deliver. It’s a real meritocracy. I have a lot of friends that, unfortunately, are racially profiled in the U.S. They found Web3 and to them it's the coolest thing.
How did you find collaborators/co-founders to join you in building your dApp?
I like this question a lot because it really emphasizes what crypto is all about. I met my co-founder when I was doing my Master’s and we found each other because we both love crypto so much. Everyone else in our program wanted to get into hedge funds and investment banks and thought we were idiots. But we were the only two saying, ‘Why do you want to go to TradFi? They’re scamming you. You’re the stupid ones.’
I think the moral of the story is actually you want to meet people that have the same kind of values, and love same the things you do. So that's how I met my CTO and CMO, through this close friend in our circle of friends. So we just grew into kind of like a crypto, degen, Web3 circle.
What is your relationship with the broader Web3 developer community? How and where do you interact with your peers?
Crypto Twitter. Telegram and Discord, but yeah, Crypto Twitter. I think the beauty of Web3 is that it's transparent. I mean, you could literally ping almost anybody on Crypto Twitter, talk to them and connect with them.
What was your experience in finding and winning investment in the development of your dApp?
Yeah, that's a cool question, too. So my project actually started as an XML document that was sent to Binance Labs incubation season three.
I didn’t have a proper pitch deck but we had an algorithm that worked. And then we showed them and they realized that it was legit.
After the incubation we pitched a lot – more than 100 companies. There was a lot of rejection, you have to be prepared for that. The pitching process isn’t as glorious as it may seem. You’re going to get tons of people questioning you. But you have to have conviction for your project and believe in what you’re doing. If you’re not prepared for that, you’re really not cut out to be a founder. But if you have a good project, there will be VCs who will recognize that and support you.
Where do you see DeFi going in the next 12-18 months? What areas interest and excite you the most?
I think the future of DeFi is very bright, especially what just recently happened with the FTX fiasco. I think BNB Chain is a safe place to build. I think developers want that kind of stability. Once the dust settles I think this incident gets rid of a lot of bad actors from the ecosystem. People are still building. Crypto will survive.
What advice do you have for entrepreneurs and developers looking to make the transition from Web2 to Web3?
Just start building. I think there's gonna be a lot of ups and downs but look at how many great projects were built in the bear market. DeFi hasn’t been affected. It was business as usual.
There are immeasurably intelligent people in the crypto space. You need to put them to work to innovate more. We need more people to come to Web3. Why would you want to work in Web2? It's so boring and not cool.
Nothing is more important than building. It’s not easy but it’s an opportunity to come in and help shape the future of finance.
Listen to the entire conversation on BNB Chain’s Twitter Spaces.