Pegasus Finance Community Call #1

We had our very first community call on Friday and had a great time with our community. Here’re the topics we covered:

  1. Founder Intro
  2. The Pegasus Vision
  3. More on Interest Rate Perps
  4. NFT Community Bootstrapping
  5. Roadmap
  6. Pega OG Status

Below’s a cleaned up transcript of the call. Enjoy!

Intro

Welcome to our very first Pegasus community call, Pegas! Super excited to kickstart this protocol with y’all. We cannot understate how amazing our community has been. We literally created our twitter/discord 3 days ago and we already have community members translating our blog posts and posting dank memes. So shout out to each and every one of you!

Let’s get right into it.

We’re Girish and Andy. We are the core team of Pegasus. Both of us are builders — have been coding since we were children. We have built a tonne of cool projects — a social audio app, a live shopping app. We have also worked at big tech companies like Google and Facebook. That said, I can say with absolute certainty that Pegasus is the most exciting and grandest thing we have ever worked on.

So what is Pegasus? At a high level, we are building an interest rate perpetual that lets traders speculate on DeFi interest rates. We care deeply about the community we are building — so we are pioneering a NFT based bootstrapping mechanism to drive that.

Before we get into more details, we want to talk more about our vision and motivations behind Pegasus.

Vision

As we were figuring out what to build, we looked at macro trends over the past decade. The one that stood out to us was the fact that the average retail trader was getting smarter and more sophisticated. Just ten years ago, it wasn’t commonplace for retail traders to trade stocks. That’s now table stakes. We also see traders demanding & using more complex products like perps, options, etc. DeFi in particular has supercharged this movement by taking financial products once available to an elite select few and making them accessible to the common person.

We thought about how we could continue this momentum. Interest rate derivatives made the most sense to us. There’s been an explosion in yields and rates in DeFi over the last two years — we have seen money markets such as Aave and Compound mature over the past year, offering more assets and deeper liquidity. The borrow rates in these markets fluctuate a fair bit which provides a vector for traders to speculate on. A interest rate perpetual lends itself well to this use-case.

That said, the interest rate perp is the first of many — we want a sustaining protocol built around a thriving ecosystem of products. We want this to be driven by a strong, aligned community. So, we want to build a truly meritocratic community that rewards both financial contributors and members who do work for the protocol. Our community bootstrapping mechanism is aimed at that.

Glimpse into Interest Rate Perp

Let’s get into how the interest rate perpetual works. Simply put, it’s a perpetual over an underlying DeFi borrow or interest rate. As an example, let’s consider the Aave USDC Borrow rate. If the current rate is 6%, the price of the interest rate perp is 6 cents. And if the rate goes up to 10%, the price of the perp will be 10 cents. That way you can take long and short positions with leverage.

Community Building: Levelable NFTs

Many of you have probably seen glimpses of what we’re working on here. Specifically, the PegaPal images that have been floating around discord, as well as the massive 200,000,000% APY.

Let’s see how it all connects. I want to first highlight why we’re deviating from the traditional token model and are instead using levelable NFTs.

We want our community to be personal. NFTs have this nice feature where everyone feels like a unique member of the community. You’re more than just the number of tokens in your wallet.

We also want to create a highly meritocratic community. We built this into our NFTs by adding a level feature. These levels correspond to how much you contribute to the protocol. This is because in order to level your Pegasus you have to burn a specific amount of Pega tokens. Right now we’re eyeing about a hundred Pega tokens a level. Each time you want to level up your PegaPal, you’re making this internal decision on whether you want to dump your Pega tokens for a quick buck or level up your PegaPal for longer-term benefits. These benefits include a greater share of the APY, more governance weight, and price appreciation of the asset itself. Thus, the act of leveling up your PegaPal functions similarly to bonding value to your PegaPal. That becomes a profound signaling mechanism since it shows your belief in the long-term vision and value-generating ability of the protocol.

Community Building: Bootstrapping

Let’s now talk about the bootstrapping mechanism and how you can actually get one of these initial Pegapals. The current plan is to release about 7,000 of these at the start. These Pegapals will be inflationary as we decide to bring more people in. This will be open to a DAO vote as well.

We’re dividing the initial 7,000 NFTs into two sections. The first section will be acquired by financial contributors, and the second section will be acquired by effort contributors.

Financial contributors can buy into the system through a traditional English-style auction. Highest bidder wins. This is for folks with more financial resources. It’s the most direct way in and doesn’t require any waiting periods or manual task completions.

Effort contributors are folks who are passionate, do a lot of work, but might not necessarily have big wallets to be competitive in financial auctions. We wanted to ensure that we had a way for these people to enter the system.

For these task mints, there will be about a 30 day period where people are doing tasks daily. These tasks include retweeting something on Twitter, tagging friends, getting influencers to promote the protocol.

Each day that you do tasks, you receive a reward in $Sealed Pega tokens. Sealed Pega tokens are essentially our protocol tokens, except that you can’t trade them with others. These tokens are only used to mint PegaPals via effort. So, we don’t want a financially able actor to game the system. We want community members who are actively working on tasks to have a fair shot at getting these PegaPals.

After a person has accumulated enough sealed Pega tokens by completing tasks, they can immediately mint on a first come first serve basis. Folks who are in our community early and start working on the tasks before others will be at a considerable advantage because there’s only a fixed amount of tokens that you can earn each day.

NFT Staking

We will also offer an Olympus-style staking mechanism where members can stake their NFTs for APY offered in Pega tokens. This allows us to pay out protocol fees to community members and reward contributors incrementally over time.

Questions

Are there any VCs behind this project, or has a seed round been raised?

No.

How big is the team?

2 people now.

What are Pegasus’ revenue streams?

There are three sources.

The first is through NFT auctions. As Pegasus community members complete more tasks, the broader crypto community will start paying more attention to Pegasus. More people will then try to join the community, driving the auction value of the NFTs.

The second is through secondary NFT sales. The current target is to potentially take a 15 to 20% royalty on each resale.

Finally, we have transaction fees from the interest rate perp market.

On what chain will Pegasus Launch?

We haven’t decided yet. That said, it’s probably going to be an L2 or an alt-L1 with low gas fees. We’re targeting a retail audience for the perpetual and want to keep gas costs as low as possible.

Why did the team decide to do Olympus DAO style staking?

The model is great in terms of driving attention and encouraging people to hold protocol assets longer. As folks contribute to the protocol (financially or through tasks), the protocol “pays” them back over time through the staking APY.

This means that when one wants to sell, they have to consider the fact that they will have to forego their earnings which will instead be distributed to hodlers within the community. As such, we believe that the model works well because it aligns incentives — rewarding community members who strongly believe in the protocol and stick it out through ups and downs.

Where’s Pegasus in terms of development?

We are about a month away from launching the NFT bootstrapping phase. We’ll launch the interest rate perp product a few weeks after that. In the coming week, we will be having a special whitelist drop that might have something to do with Pega OG roles.

Why the name Pegasus?

It’s from an internal joke we had. Unicorns are billion dollar companies. The next step up from a unicorn would be a Pegasus — a trillion dollar company. We want to be that.

What’s our unique selling point? How are you different from other DAOs?

We are combining a novel DeFi product (Interest Rate Perpetuals) with a novel NFT-based community bootstrapping mechanism, which has never been done before. In the context of the DeFi protocol itself, there isn’t an explicit, user-friendly way to speculate on DeFi interest rates yet — Pegasus uniquely offers that. As for the DAO, we’re pioneering this idea of combining virtues of both NFT and Defi tokenomics to remedy each’s shortcomings.

Are you guys going to be building more financial products on top of interest rate perps?

Yes. An interest rate perp market is a novel primitive on top of which more structured products can be built — fixed-rate lending, interest rate swaptions, etc.

How did you guys gauge demand for betting on interest rates for retail traders? How can you ensure that you have enough people to trade this product?

We believe there’s existing latent demand for the product — there are multiple fixed rate/yield stripping protocols out there with significant usage. But, they aren’t that accessible to retail traders because they are a bit hard to grok. We believe a perp market lends itself very nicely to direct speculation on rates by allowing traders to take longs and shorts with leverage, which is more retail-oriented.

We also believe there are interesting, degen yields out there that retail traders will enjoy trading on. That’s an ongoing discussion— some rates being considered include Olympus’ staking APY and Curve Finance’s gauge rates.

The Alpha that Call Attendees Received

For only call attendees, they received Pega OG status if they had retweeted the PegaNation post and tagged five people in the tweet.

Community Asks

We’re looking for social media/community mods. Ping any team member in our discord if interested.

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A retail focused interest rate perpetual on Optimism

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