Host: Ana | Arbitrum
Guest: Dhruv | Qoda Finance
Space: https://x.com/arbitrum/status/1770120154375991745
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Ana
Hello, GM, and welcome to a new AMA with Arbitrum!
Today is a very special day because after the blobs upgrade, we now have lower fees on Arbitrum. So, I’m super excited about that and also about having this AMA with Qoda Finance and Threebalance. We are super excited to have you here, guys. I’m looking forward to hearing more about you.
Here we have the founder and CEO of Qoda Finance. Maybe you can share more about yourself and Qoda?
Dhruv
Thank you, Ana. It’s nice to be back. I know it’s been a while since the last AMA, but a lot of exciting stuff has happened. So I appreciate you hosting us again.
My name is Dhruv Dang. As mentioned, I’m the CEO and founder of Qode of Finance.
Our mission at Qoda is to decentralize institutional financial services and make them accessible to everyone. We believe that this mission aligns with the core values and mission of crypto and DeFi in general.
Some background about me: I started my career on a trading floor in Singapore at Deutsche Bank. I’ve been writing code since I was 14. I bought my first Bitcoin in 2013. Everything has come together in the work that we do at Qoda Finance.
Ana
Awesome. I’m super excited to have this AMA again with you, as I see that you guys are building. It’s super cool to see that, to be honest, and very nice to have you. Now, I’m sharing the updates that you have in Qoda Finance, and today, we are going to discuss your new product, Threebalance. I would love to hear more about it. What is it? How did everything start?
Dhruv
Threebalance is a new DApp that we just launched. First, some background about how we launch DApps. Our team is getting ready to launch our DAO in a couple of months, and there will be one DAO that governs a bunch of different services that we run.
To realize our mission, we can’t be a one-protocol team. We have to build and operate many protocols as quickly as we can so we can catch up and overtake TradFi. Threebalance is an example of one of those protocols.
It is an on-chain tool that enables you to rebalance your crypto portfolio in three steps. It combines the best of portfolio management and TradFi, which has been used for a very, very long time.
There is actually an online community that discusses the philosophy behind rebounds called Boggle Heads, which references Jack Boggle, the founder of Vanguard. And it brings that to crypto, making it fully on-chain.
We are hoping that it will change how people interact with DEXs and invest in crypto assets using on-chain liquidity pools. And we’ve tried to make it as easy as possible.
Ana
I love these new things that are improving people’s lives because, back in the day, a lot of web3 platforms were super hard to use or some of them still are. And having now a new product like Threebalance is awesome to see. Well, I would like to ask you how the community can get involved with Threebalance. Wondering if it’s live? How Arbinauts can use it?
Dhruv
Yeah, it is live. It’s available at threebalance.co. You select Arbitrum from the networks list and then connect your Metamask wallet to start the flow. It’s really easy to use. Once you’ve connected your wallet, you see your current assets and the percentage they make up.
A common way to view your portfolio holdings in TradFi is to look at the percentage of your portfolio. We don’t do this very often in crypto unless you have a spreadsheet and are a super nerd like me. But this automatically does that for you. It converts your holdings to US dollars, so you can see the US dollar value.
Once you’re on that page, you select the assets you want to rebalance. And this is where it gets really interesting. In the next step, you can enter your new portfolio allocations by percentage. So instead of thinking about the exact amount of a particular token you want to buy and sell, you think in terms of percentages, which is how the world’s best fund managers think. You know, because they need to scale their portfolios to billions of dollars.
We should do the same thing for our personal and DAO Treasury accounts. So, you enter the desired assets that you want to hold in your portfolio and the percentages, and then Threebalance will do — it will figure out exactly the trades you need to place in the most efficient way possible to save you gas and get you the best prices. It uses 1inch to power all of the liquidity, which is required to make these swaps happen.
Once you’re on that page, you can just go through and execute those transactions, and Threebalance guides you through that in a very fast way. So you’re not manually fumbling around with numbers or dealing with DEXs swapping tokens one by one. So, that’s how you use it.
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Ana
I see. That’s a very straightforward process. Thank you for sharing it. I would also like to know the motivation behind Threebalance and why you decided to build it.
Dhruv
That’s a great question, and we’ve touched on this a little bit in terms of portfolio management and how this philosophy works.
It’s about introducing a new way of thinking about managing portfolios to crypto people. I’ve been a part of crypto for a long time. I care a lot about our community, a wider community in Arbitrum, and people who are dealing with DeFi. I think there’s a shared vision that we all have: to make finance fully decentralized. We don’t want centralized institutions that control how money flows in our society.
Threebalance is a small step towards realizing that vision which is to bring portfolio management to crypto. Because if we don’t, if we’re not competitive with TradFi, it’s going to be really hard to achieve that with portfolio rebalancing. I’m a part degen in crypto, and I wear that badge very proudly. I would like to see the financial tools used by institutions more accessible to everyone, someone with a $100 portfolio or a $1000 portfolio. That’s who we’re building Threebalance for. It is for them as well as for the whales and the large holders of tokens. So, that’s sort of the philosophical motivation behind why Threebalance exists and why we want to push DeFi forward with products like Threebalance.
Ana
Yeah, I totally agree. Those are the basics of the Web3 ecosystem: decentralization, security, and the ability to hold and manage assets on one’s side.
Well, now, I’d like to ask you what the benefits of rebalancing your portfolio are.
Dhruv
The benefits of rebalancing. Let’s start with what is rebalancing.
The idea comes from an investor sitting down and deciding: “These are the assets I want to hold in my portfolio, and these are the reasons why”. So we can imagine that I want to hold ARB because I really believe in Arbitrum One and what the core team is doing. And I think there’s so much activity there. So I’m going to hold ARB. I’m also gonna hold some Bitcoin. I’m also gonna hold some ETH because I believe in Ethereum. I’m going to choose how much I want to hold in my portfolio. And I’m going to express that as a percentage. So I will hold maybe 50% of my portfolio in ARB, 25% of Bitcoin, and 25% of Ethereum.
And that’s what fund managers typically do. They look at the market and see what’s available to invest in, they decide what to have in the portfolio, and the exposure of each asset. They express that as a percentage. I’m pretty sure, that doesn’t really happen in crypto massively. I don’t think anyone is really training that mindset, but this is how fund managers do it and that’s how money is made in the world at the institutional level. So why not make it possible for everyone else to do it?
The term rebalancing comes from the idea that over time our portfolio of ARB, BTC, and ETH won’t change in value in the same way, as they are not 100% correlated to each other, which means that your initial weighting, the percentages you want to hold of each asset are going to drift from what your original target was. So, maybe ARB does really well and it becomes 75% of your portfolio. Bitcoin’s worth now is 10%, and Ethereum is worth 15%. Now, that’s way off from our 50–2525 goal. Rebalancing is this idea of coming back to that original percentage mix. And there are tons of benefits of rebalancing. A simple example is that it enables you to buy low and sell high. We have a bunch of content on our Twitter account that explains this. I won’t get into the details now. But that’s the main reason to try and stay true to your core thesis as an investor.
With Threebalance, it makes it really easy to do that in a low-cost way. You tend to get better results because it’s impossible for people, as humans, to have a perfectly rebalanced portfolio. At the perfect time, we can only do it at certain intervals like maybe every month or every quarter, maybe once a year. But if the tooling is really good and it allows you to do it in three minutes, that’s an amazing amount of time. You can’t even do that in TradFi.
And that’s the exciting part about rebalancing and the concept of rebalancing in crypto.
Ana
That totally makes sense. Now the tool is live, what is next on the Threebalance roadmap? Are there any other features that you would like to add to it?
Dhruv
I think for us our goal is to support as much of the DeFi ecosystem as possible. So right now, we support wallet assets. What we would like to do is get more integrated with other protocols. For example, it can be Qonstant, another one of our products that allows people to lend and borrow at fixed rates.
The lend position in Qonstant is represented as qTokens, which are just ERC-20 tokens. So we would love for people to be able to go in and out of their lending positions using Qonstant liquidity directly from Threebalance.
The hypothesis here is that investors want to hold fixed-income positions in their portfolios, not just tokens or, I guess, the crypto equivalent of equity.
That brings rebalancing up to a whole new level because you can have these very balanced portfolios.
So, what we’re planning to do later this year is to build more and more integrations like that.
One way to do that is with liquid state derivatives. There’s another protocol, which I think you have or had an AMA with recently. I won’t say that name because the partnership isn’t official yet, but we are chatting with them.
And the goal is to work on bringing these sorts of LSDs into Threebalance, which gives us a very easy way to launch a bunch of different integrations at once.
Those are the things that we’re focusing on right now. We are, as I mentioned, powered by 1inch. So we are also exploring ways to deepen that partnership by improving the Threebalance UX and UI. There’s a lot of great stuff on the roadmap that’s coming out over the next 3 to 6 months. Stay tuned.
Ana
Wow, that’s a huge alpha now. Liquid sticking on Threebalance. That’s cool. I guess we are going to have another AMA to discuss this.
The community is always asking about security.So, wonder how secure Threebalance is or what strategies you’re using to improve security.
Dhruv
Yeah, another great question. We are powered by one inch. So all of the chain execution logic is handled by 1inch and partner pools and protocols: 1inch is an aggregator, and there are underlying pools that they work with.
We don’t actually run any of our own smart contracts with Threebalance. We don’t actually need to get audited, which is beneficial. The other thing is you don’t need to lock your assets into Threebalance. There’s no sort of place you need to store them on-chain with smart contracts controlled by our team. It is fully self-custodial. You do have to interact with the blockchain to make swaps and approvals for transfers, but that’s all done through 1inch contracts.
After the AMA, give it a go: connect your wallet and see how it works. You’ll see a list of transactions that you need to execute to complete your rebalance. It’s very transparently shared there.
When you hit the rebalance button, Metamask opens to execute those trades. No funds are ever sent to a wallet controlled by Threebalance. This is all done as a nice UI atop the 1inch API. So that’s Threebalance security in a nutshell.
Ana
Fantastic. To be honest it is very exciting to see how you are continuing to build on Arbitrum and also delivering new products and, for sure, improving the user experience. I remember that we spoke to you a few months ago about your first DApp that it was called Qonstant. So, how’s it going?
Dhruv
Things are going really well. We recently crossed 1.5 million dollars in TVL, which is a huge milestone for us. Qonstant is also bringing something new to DeFi. It’s an order book-style fixed-rate lending and borrowing marketplace that’s fully on-chain. It only runs on Arbitrum One.
It’s bringing a lot of the complexity to transfer something from TradFi to DeFi and we tried to simplify it as much as possible, but it’s pretty amazing to see the crypto community learn so quickly. We’re really close to $2 million of loans traded.
We are working on Qonstant V2, and we have a couple of partnerships that we are in the process of negotiating and want to announce pretty soon. But one of the core ideas behind Qonstant, was to bring borrowing, altcoin borrowing, and lending to fruition.
And with the way the last bear market went, I think it was a challenging environment to do that. So Qonstant V2 leans a lot more into this original vision that we had and aims to make lending and borrowing at fixed rates on-chain a lot more accessible to everyone.
Ana
Congratulations, you’ve been doing a great job. It doesn’t matter if you’re a small project or a huge project. We are going to try to help you out by organizing AMAs with you or sharing your content on social media.
I’d like to ask you also, how can the Arbitrum community get involved more and follow your progress.
Dhruv
We really appreciate the support that you offer us. So, thank you so much. You and the rest of the Arbitrum team that we’ve been working with, we’re super grateful.
To get involved, the easiest way to follow our progress is here on X. So, the Qoda Finance account is our sort of core account that will have new news about all of our products and the DAO. The Threebalance account has many more deep dives and interesting content about Threebalance and portfolio rebalancing. So if you found what I spoke about today interesting, definitely follow the Threebalance App X account. The other way to get involved with us is through Discord and Telegram.
We’re happy to discuss and answer questions. We want people to feel like they have a say in the community, especially as we ramp up to launching our DAO, which will govern all of the products that we’re launching.
Another way you can show support is by rebalancing your portfolio. Give Threebalance a try and tell us how we can improve it.
Ana
Awesome. That’s great. We are almost about to finish this AMA, thank you very much for joining us today. It was very cool to get to know more about Threebalance, the new product that Qoda Finance is building. So, congratulations on this and wondering if you would like to share something else with the community.
Dhruv
Yeah, I just wanted to say thank you, thanks for tuning into this space. Thank you for supporting us from the very early days of Qoda was just being an idea, Qonstant was just being an idea and here we are with our second product out and more products on the way.
I also wanted to say thank you to the Arbinauts and Arbitrum Foundation. We feel very welcomed and at home on Arbitrum, our DAO is going to be native to Arbitrum One. And more news about that on our socials coming soon.
Ana
Thank you very much.
Dhruv
Awesome. Thank you, Anna. Thanks everyone for joining.
