Lighter founder Vladimir Novakovski on building a low-latency, verifiable decentralized exchange on Ethereum

Speaker 2: What's happening?

Speaker 1: How are Can you hear me? Yes. We can hear you. Please introduce yourself. Introduce the company, for those who aren't familiar.

Speaker 8: Awesome. Yeah. Good to be here. Actually, I think you had, my former cofounder Scott on a couple weeks ago who's now working on Cognition.

Speaker 1: Oh, Scott. Of course. We've had him on a bunch of times. Woah.

Speaker 2: TBPN hall of fame.

Speaker 1: We TBPN is made possible by Cognition, the makers of DevOp. Oh, really? The AI software engineer. We we we love doing ad reads for Cognition. We're the other makers of DevRel. Oh, nice. Nice. Nice.

Speaker 2: Yeah. No. We're not here to promote you and Leiter. Yes.

Speaker 8: Exactly. So I'm Vlad. I'm founder and CEO of Leiter, which is decentralized exchange built on top of Ethereum. We can talk more about, you know, how we built it and and why, but, you know, we're we've we launched in January and kind of had pretty strong growth this year with our main net, and we actually had a public launch in, you know, October 1. But, yeah. And I guess, yeah, before later, I worked on a lunch club, you know, with Scott. And prior to that, I I guess I'm kind of like like, I'm not a crypto guy that got into finance. I'm more like a finance guy who took a detour to AI and then, you know, got into DeFi.

Speaker 1: Yeah. Talk about the some of the some of the some of the choices that you've made. Like like, why Ethereum compared to other, other chains? Why decentralized exchange? Like like, of the of the technical decisions that you made, I feel like we've talked to a lot of folks who have picked out different quadrants if we do a two by two quadrant or something like that.

Speaker 8: Yeah.

Speaker 1: You've clearly landed in one particular piece, one particular spot on the market map. How would you describe the trade offs that you've made, and then why did you make those trade offs?

Speaker 8: Awesome. Yeah. That's that's a great question. And we actually started working on lighter right around three years ago. Mhmm. So, like, mid to late twenty two is when we were thinking through that idea maze as it were. So it's interesting to, like, look back now. And the, you know, the genesis of the idea, right, was that we were thinking about digital assets. Right? Like, digital assets have been around for ten, fifteen years. Right? Like, they've been traded a lot. I mean but most of them represent some kind of blockchain or or, you know, decentralized protocol or, like, rails for the future of finance. But the weird thing was that, like, 99% of the activity of how they're traded actually did not use the rails of the stuff that these assets are building. Right? Like Oh, it's it's actually trading in a centralized way. And, like, centralized exchanges have you know, there's some good ones. Right? You know, they they you know, I I think some of them definitely have provided value to customers, but, like, at at the basic premise, right, like, a centralized exchange doesn't actually use the blockchain at its core to verify what's going on. And and, like, in some cases, it's actually worse than TradFi. Right? Like, at least in TradFi, have, you know, regulations and the legal system to fall back on if something goes wrong.

Speaker 1: Like Yeah.

Speaker 8: Right? Like and we send the thing is that, like, actually, almost three years to the day is when FTX collapsed. And we we were looking at that when when we're thinking about how to build lighter, and we thought, okay. Well, now people will get it and, like, volume will move away from centralized exchanges Mhmm. After, like, one of the big ones failed, and that didn't happen. So what that taught us was that, actually, like, the decentralized exchanges that existed at the time, like, their product market fit was so bad that people would rather trade somewhere where there's, like, a one in six chance of the whole thing being a fraud than, like, using the decentralized products. And so right. So then we thought, okay. Well, we this is something we we should be part of the solution to. Right? And so for us, it's like, okay. What we wanna achieve is low cost, low latency, secure, verifiable, and composable.

Speaker 2: Mhmm.

Speaker 8: And, like, the first three of those are pretty self explanatory, but, you know, what does verifiable mean? Right? It it it means that everything that happens, there's a cryptographic proof that it happened fairly and correctly. And, like, why is that important? Well, if you ask the reverse question, like, what if what if it's not verifiable? Well, that means there's some part of the system where you're just like, trust me, bro, which is kind of, again, defeats the even if there's one part like that, you know, like, the whole thing could be, you know, manipulated or, you know, corrupted. Right? So that's a problem. Right? And then composable is also important because at the end of the day, we're we're not just trying to build a sandbox for people to speculate on. We wanna build something that's composable with the rest of DeFi, whether it's lending, stablecoins, you know, staking, you know, prediction markets, all this other stuff so that it can kind of all work together in smart contracts. So, anyway, so we had those five goals. And going back to your question, like so Ethereum was the obvious choice for the security layer. Right? For it to be secure, we had a pretty strong view that the layer one that's by far the most secure out of things you can build on is Ethereum. Another you know, we you know, Solana has built a great l one as well and others have too, but, you know, Ethereum is, like, very secure. It's been stable for a very long time. So that was pretty clear to us. And, yeah, we can dive into how we achieved other goals. But as far as, like, why decentralized and why Ethereum, I think that that gets into those points.

Speaker 1: I I I don't know if we have enough time to go super deep into more of the technical side. I'm more interested to hear about how you met Ken Griffin, honestly. So could you tell me the story of, of of the Ken Griffin, recruitment? I would love to know, like, how did he even know to reach out to you? What what happened there? Tell me the full story. Yeah. Because I think that's fascinating.

Speaker 8: Yeah. Yeah. So and by the way, I'm, you know, also based in Miami now Yeah. For the last five years. So, you know, not only did I learn a lot of stuff from Ken about finance and business, but also that South Florida is a good area.

Speaker 2: That location. Yeah. Yeah. But,

Speaker 8: you know, so so the I I guess, you know, the thing with my time at Citadel and you know, the the so I was 18 when I finished Harvard and actually even

Speaker 2: Right.

Speaker 7: While a student.

Speaker 2: Let's give it up for finishing Harvard at 18.

Speaker 1: Congratulations.

Speaker 2: Continue. What

Speaker 8: what what's that what's that account? Like, VCs congratulating themselves?

Speaker 2: Or No. We're congratulating you. You just said a fact. You just said fact.

Speaker 8: You just said a fact. But yeah. So and, actually, like, even at school, I did some trading and was working on kind of a side project with two friends around options. And so, you know, so I was doing that, and that didn't quite get off the ground. But I got to know the team at Citadel through, you know, essentially, like, research firms. So, you know, it's not

Speaker 1: Oh, wow.

Speaker 8: You know, it's not like Ken personally gave me a call or something, but I got to know the team, and they wanted me to join. And then kind of towards the end of the process, Ken got involved and spent a bunch of time with me, you know, to tell me more about what their high level goals are at Citadel and their strategy and why it would be a good fit for me and kind of making sure that I'm comfortable joining them. And I guess without going into too much details, I mean, he made it a very attractive proposition for me and was pretty involved,

Speaker 12: you know,

Speaker 8: the first couple of weeks, especially of my work there. And, yeah. You know, he's, to this day, someone I thoroughly look up to. And

Speaker 1: Yeah. There I I just hope that he's gonna lineage here.

Speaker 5: Sorry?

Speaker 1: Hey. There's just fascinating lineage here, obviously. Ken Griffin went to Harvard, was trading in his dorm room. It took him a couple extra he didn't he didn't graduate at 18, so he sort of mocked him on that front. But but then, of course, he had a deep relationship with Robinhood, and Robinhood Markets came in and invested in this round. And so there's a whole bunch of, like, full circle moments to

Speaker 2: be next. I I did wanna quickly ask if you think that the industry fully learned its lesson from FTX. Cause I feel like there's I've seen some chatter over the last few weeks around various exchanges saying like, no, your your funds are frozen, but don't don't worry. We're we're we're working on it. And it's, you know, maybe sending some alarm bells.

Speaker 8: Right. So October 10 was an interesting moment, for the space, I think, that actually DeFi kind of as a whole worked well. Right? Whether it's Aave or Morpho, all those all those, protocols. And, I I think our competitors, you know, handled those market moves in different ways, but I think all of them in the context of DeFi work the way they were supposed to work. You know, some of the centralized exchanges, I think, maybe again, like, the problem there, right, is, like, lack of transparency. You don't really know like, did they actually liquidate their customers correctly or not? Like, maybe they did. Right? Like, maybe maybe everything worked exactly as expected. But if it didn't, there would be no way we would even know that. And so I I don't I'm not aware of any cases of specific wrongdoing by centralized exchanges in that cycle. But, again, with the lack of transparency, there was no way I would know that. And, you know, we we do know there have been some, like, blowups of kind of smaller hedge funds, like, chain hedge funds. Right? And what ultimately caused those is unclear. But the one thing I will say is I remember after FTX, there was this whole thing about, like, okay. Let's even centralize exchanges. Let's like, let's make them more verifiable and, like, prove reserves. Now, of course, like, what does that mean? Because, like, you can prove assets, but how do you prove liabilities? But still, like, there's some push to do that. And I remember Vitalik had some ideas on how to do that, and Binance was looking into it. And then, like, I think someone asked CZ about it, and he was just like, well, you know, Vitalik is very technical. Some of the stuff is, like, too complex or something like that. Right? So I I don't I don't know if the centralized exchanges have really truly learned their lessons on that front, but, you know, did anything particularly egregious happen that I know of October 10? Like, I can't say that. But, again, the, you know, the whole point is that, you know, it's supposed to be transparent and trustless.

Speaker 5: Mhmm.

Speaker 2: Well said. Well, glad you're glad you're building what you're building.

Speaker 1: Yeah. Well, thank you so much for coming on the show, and congratulations on the massive fundraise. Very excited to continue following the story as you continue to build this company. But have a great rest of your day. Awesome. Hope you enjoy Awesome. Thanks for having me,

Speaker 8: guys. Miami.

Speaker 2: Cheers. Come back soon.

Speaker 1: Have a great

Speaker 8: rest of

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Speaker 3: Thanks. See

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