Recently, I had the chance to sit down with Bones, a core contributor (developer) to TsunamiX, an innovative margin and spot exchange on the Mantle blockchain.

During the interview, we discussed his journey building TsunamiX and the Protocol’s migration from Aptos to Mantle.

If you want insight on what it takes to build a DeFi protocol, and its various business development aspects, this article is for you!

How has your experience been building TsunamiX?

Yeah, it’s definitely a challenge, not just from a technical perspective. I think what’s always the hardest part when building a protocol is the PMF perspective, finding product market fit.

A lot of these projects are so similar, there are slight variations and stuff like that but at the end of the day, it’s about, can you get the users? And there’s a wide variety of ways to achieve that which you know, we see all the time these days.

All these different incentive structures from Blast points to all the points in the Solana ecosystem, with Defi. There are all of these different ways to get people to participate in products that are no different than other products. But, that becomes the biggest challenge.

Why is TsunamiX migrating from Aptos to Mantle?

Building on Aptos was a challenge for us. You know, we were the number one margin exchange there, but it’s just extremely hard to run a profitable business in an ecosystem when, if we’re being brutally honest, there weren’t many users.

So it just became pretty obvious. It’s very clear to us that EVM is kind of consuming everything. it’s far easier to get liquidity on EVM for multiple reasons. For example, in our version of Tsunami on Mantle, we have about $20 to 30 million dollars in LP commits, that we’ll have within the first couple of months deposited. And, on Aptos, I think we only got up to you $800k. So it’s monumentally different.

For traders, this means you can take out bigger sizes and pay less fees, so it allows for a better trading experience. It doesn’t improve the LP experience because when there’s more LP liquidity, you might not actually make as much, as a smaller LP, but overall it is best for the protocol. It’s best for Tsunami as a business and that will allow us to have some longevity, and people will be able to participate in Tsunami for a long time.

How do you determine which assets to include in the Tsunami LP?

There are some very basic characteristics that we’re looking at and then some more a little bit more complex ones. Obviously, the initial baskets we started with, were very vanilla. They had just Bitcoin, ETH, the ecosystem token in which we were involved, which was Aptos. Now it’s gonna be mantle.

We had Solana and actually, the reason we had Solana was just because I liked to trade Solana and I told our team ‘Hey you got to put that in there because it’s one of my favorite assets to trade.’ But yeah, they just have to be very liquid assets. Very large market cap. And the reason behind that is [to avoid] price manipulation.

So, for example, if we listed anything in there, that was a small enough market cap where maybe a trader who’s using our platform has a considerable amount of the supply. Or if somebody somewhere else was manipulating it, it could potentially become a risk factor for the exchange.

I’m sure you heard about mango markets whole thing where they got drained. [The exploiter] was manipulating the mango token that they allowed you to collateralize and trade margins on. It was only about 30 million dollar market cap and it took him only a couple of million dollars to manipulate that price and then drain the LP of mango.

You’ll notice all the assets we have listed in Tsunami are multi-billion dollar assets. If anybody’s gonna manipulate those and drain Tsunami’s LP, well then I guess it’s GG.

Is $APT to $MNT going to be the only initial change or what other changes are you gonna make to the Tsunami LP?

We’ll probably be working with the team called Ondo Finance which is another ecosystem-level stable coin and we’ll probably eventually add more assets and stuff.

Something else we can do at Tsunami, which is kind of cool is create other baskets. [Tsunami LP] is like a very bland basket and it’s like that by design, so it’s lower risk. But we could create a basket with a bunch of risky stuff, and disclose that it’d be a whole different product of its own.

How does Dynamic Liquidity Pricing disrupt the current margin trading protocol models?

Using Pyth oracles, we’re able to get the perfect price no matter what, no matter how much liquidity you’re using. So, that’s pretty much how the dynamic pricing model works.

It’s very, very straightforward. It does become expensive to trade on tsunami when you’re borrowing. If an asset is completely utilized, let’s say 99% of ETH is utilized and [someone] utilizes the last one percent in the protocol. Well, you’re probably going to be paying a lot in borrowed fees.

How’s the migration going from Aptos to Mantle?

It’s not like we just could take our old protocol and just bring it somewhere else.

So, we basically started from scratch and that was pretty challenging. The first version you’ll see of Tsunami on Mantle will probably have even less features than Tsunami on Aptos just because we’re hurrying to get this out there. So there probably won’t be limit orders, stop losses, and a couple of other features quite yet but we’ll get some of those things out eventually.

That’s basically from like a technical perspective, that’s been the challenge, and then from the growth perspective, it’s definitely very challenging moving ecosystems. you know how people are right? They’re very very tribal when it comes to crypto, they’re like “oh you know you’re not a part of my ecosystem anymore, we hate you!” And we don’t have any animosity towards anybody. We love all the Aptos guys, It’s not like that, it’s just business.

But there really is no manual to this stuff. A lot of the challenges and hurdles that they face, [we] really gotta find out solutions to them organically especially if they’re like, reverse engineering different bits of products.

How do you feel about the current state of Mantle defi?

One of the things I like about Mantle the most is they have a very good ecosystem-level incentive structure. They have this mantle journey. So, basically, you participate in any protocol in the ecosystem, you’re earning points and you will get a mantle airdrop for that. There’s actually a bunch of them. So you’re getting a real token of value. It’s basically a rebate for your participation in the ecosystem.

One-time airdrops are a terrible idea. It’s not a scalable incentive structure. As soon as you give people that handout, they’ll sell, and move on. But if you indoctrinate people into an incentive structure where they get that airdrop and a few months later, or a few weeks later, they get another airdrop, that’s how you scale and keep these things rolling.

But, you know, it’s basically just giving people reasons to use your product, right? it’s really hard to get people to use anything.

What is Tsunami blue?

Tsunami Blue is our ordinal collection. Bit god is one of my good friends known for years, worked with him in the space for years.

So when all that started popping off I started getting all these text messages saying “hey man you know you got to check out the ordinal stuff”. [Tsunami Blue] was our attempt to dive into [ordinals] and the way that we did it was by offering a free mint to onboard people from a different chain to our protocol.

You know some of it works, and some of it doesn’t. We still have those people who are like, “Hey why isn’t my ordinal going up?” but it was a free mint and they will be getting art eventually.

That’s gonna be coming after we deploy our new protocol because that’s our main focus as a team. But basically, if you hold two Tsunami blue ordinals you will be getting a PFP art that is also going to be an ordinal.

What’s next for TsunamiX?

What’s next right now is going live and scaling the user count. If anybody ever wants to support Tsunami and support me, help them get users. Tell people about it, show people how to use it because that’s the name of the game.

I can’t tell you how many great teams I know that end up failing and they have to close shop just because people don’t use it. So that’s the biggest thing we need help with. That’s the biggest thing people can help us with and that’s probably like, the next thing on our agenda.

And we will be doing our tsunami points again for the mantle version, this will have something to do with our eventual token.