Full Transcript

Utsav Somani: Alright, folks.We're trying out a new time today.Something popped up at 04:00, but it's Monday, August 10, stream 123. So this feels really special. Our guest is joining us from Amsterdam. So thanks to him for being accommodating enough to dial in. Just like my co-host Dhruv, he's also from Manipal and they've studied together or no, because the Manipal Mafia. We'll cover that as we go along. But let's welcome Soumya to the show. Soumya, what's happening?

Dhruv Sharma: Hey Soumya.

Saumya Saxena (Base): Hey Dhruv, what's up? Glad to be here. And congrats on 1, 2, 3 episodes of the show.

Utsav Somani: We're always still surprised, man. We've done this for more than 100 streams and it still feels like, I mean, there's so much more to do. But I mean, when we started, I think we had an issue that will we get enough guests to do this like three times a week? And but honestly, the number of guests and the excitement in our startup ecosystem, we feel that we can do this five days a week. There are no plans of doing five days a week. And you're partners with ETN in Europe, right?

Saumya Saxena (Base): Yeah, correct.

Utsav Somani: So I mean, we're obviously bullish on the format and like at the intersection of tech and culture. So I love that you guys are bringing that to the Indian ecosystem. So global builders lead at BASE. Like let's introduce first, what is BASE for our listeners? And then what your role is at BASE?

Saumya Saxena (Base): Yeah, I mean, so BASE is a layer 2 blockchain and it allows anyone to build on top of it, which means that any startup company, corporate government can build their software infrastructure with products on top of BASE. And my role as builder lead is to enable the builder ecosystem in a way, which is to make sure that we are working with the best founders, the best builders and providing any support they need, right? So which includes funding, distribution, access, networks, all that. A lot of the work that you do act on in a way I feel for your members, but for builders and founders building on BASE.

Utsav Somani: So there was a Coinbase blog which said that there are 400 plus Indian builders, which have shipped on BASE and 150 of them have become companies. So how does a builder go from experimenting on BASE to actually building a product and shipping it and then building a company around it? Any success stories that you want to highlight early on?

Saumya Saxena (Base): Yeah, I mean, it's funny. In a way, you see that journey where it's just some builder hacking on a particular product and an offering and then suddenly that product takes off and then you're like, okay, now I need capital to hire a team to work on my marketing and so on. And then we make sure there's enough capital to be deployed in the system through our own venture funds, through Coinbase Ventures, through the BASE ecosystem fund. And then through our partner investor network. So that is on capital, but also on making sure that we unlock access for them into newer markets that they can get into. So we have very large presence across the globe and helping founders access Latin America. You can build a product anywhere in the world and it is live globally. That is just a function of building on the blockchain. But our part is to enable that journey. Yeah.

Dhruv Sharma: So while everything in the on-chain world is decentralized by design, I'm still curious, like, where are the global hotspots for the on-chain developer ecosystem? And how big is India in that mix?

Saumya Saxena (Base): It is pretty large. I mean, from our point of view and in general, I feel like for us, US is the biggest market and outside of the US, India is the biggest. We've got lots of founders in Europe, in Africa, in Philippines. They're all over the world, obviously. India, I feel like I know to your question earlier, we've got like a team that went from a hackathon project to being listed on Coinbase and being public. So I feel like it's quite insane on that journey, right? Where you can start off with nothing and just like hacking with a few friends, you win a hackathon prize, you win $5,000 and then suddenly you can go live and access like global liquidity, global distribution. It's kind of mad. I love it. I feel like that's the reason I am in the space because it's so exciting on what's possible and how quickly that is possible.

Dhruv Sharma: And Saumya, maybe just for the benefit of listeners who are relatively new to the on-chain world, could you just describe the advantages that an L2, like one level of abstraction gives to the developers building on it? I mean, it's just faster.

Saumya Saxena (Base): I think a good way to think of like on-chain or building on blockchain in general is that it allows for two things, which is it allows for capital coordination in a much sharper way. And it allows for data coordination, again, in a much more seamless fashion. So what that would mean is that if tomorrow I wanted to buy a property in Dubai, I could pool in capital with my friends from all over the world, like our Manipal network, just ping in the WhatsApp group, send them a link. And all of them could pull in, you know, $5,000 each and you could buy a property in Dubai. Now that is capital coordination. That is very hard to do in the regular world. And obviously there are like regulations around it. But what I mean to say is that regulation is always behind the tech. And this is the tech which enables so much financial innovation. And it's a very new design space. And so that's on the capital coordination side. On the data coordination side, it's in a way where you don't need to build anything from scratch. So anything that has been built, you can build on top of that. And that allows for exciting new design spaces, which means that if someone has built like a food delivery app, you could build a nutrition app on top just by leveraging that data stack, which is not possible outside the on-chain world. So the way I like to think of it is that every time you're moving out of on-chain to off-chain, you're adding complexity. And the more business primitives that come on-chain, the easier it becomes to live and breathe on-chain. And it's kind of like, you know, how we used to, if you come from consulting and investment banking, you work on these Excel models. And it was like every time you would make changes, you would send it to your manager for review. Then he would send feedback. It was like a whole loop where there were like five steps involved. And now with Google Sheets, it's seamless, right? Everyone can work on the same sheet, same stack. It's kind of like that where you can now work in a shared capacity.

Dhruv Sharma: You've significantly lowered the coordination costs for any large project. I think, I mean, I'm sure Utsav has many questions to ask you. Maybe the final one from me for now, Saumya, also talk to us about this collision of the on-chain, off-chain world and what are on-ramps, what are off-ramps, you know, out of that world.

Saumya Saxena (Base): I mean, it's a good way to think, like I said, right? Anytime you move from on-chain to off-chain, you add complexity. Now that complexity could be in various shapes. When you're moving capital from on-chain to off-chain, you're off-ramping. And when you're moving from off-chain to on-chain, you're on-ramping. So it's like, if I want to put money in my wallet, and I have money in my bank account, then I put, say, $10,000.

Utsav Somani: MyPay is still launched in India as well. So I think you're finally hitting these rails as well. So on-ramp, off-ramp, without the P2P mechanism is finally live in India.

Saumya Saxena (Base): Yes, yeah, finally. I mean, we got there. I feel like the Coinbase way is to do things the right way, which is like, we're going to spend time. We're going to figure out all the regulations. We're going to take as long as it takes, but we're going to do it right. So I think, like, finally India is there, where off-ramping, on-ramping is much, much easier.

Utsav Somani: But you're, I mean, the person leading it within Coinbase in July wrote, Jesse, that on-chain social didn't take off. So now you're betting on the next wave, which is prediction markets. And coincidentally, our next guest is from the prediction market space and building on base. So we invited him to do a joint segment with you later in the show. But when, like, I mean, how do you place bets? Like, how does base think about what projects to support? How do you give the grants out? Like when a builder comes to you, is there something that you guide him on or world is an oyster and you can literally start building anything and you guys will support that?

Saumya Saxena (Base): Yeah, I mean, for us, I think, like, we took a very big bet on social last year and it did not work out as well. And then I think the market constantly kept telling us, hey, this is not going to work out. And now the bet is, like, we've listened to the market and we focused on on-chain finance as a category. I feel like social was too early then. Personally, I feel it's still a great time to build a social app built on these primitives. And yeah, my sense is that this is going to take off sooner or later. And from our point of view, I think we are focused on financing, like, the base ecosystem fund, coinbase ventures. We will take bets across the board. And we put out these, like, requests for builds every quarter. This quarter, we focused on trading. We focused on on-chain finance as a primitive. We focused on agents as a category. So I feel like those categories and stablecoins. So we focused on these four categories. We'll be investing a lot more than others. But that does not mean that if you're a builder building consumer app, you should not be building on this. I mean, it's still an open stack.

Utsav Somani: Stablecoins. And you guys don't have a token yet of your own, right? And no plans to launch a base token. I mean, stablecoin, it feels like everyone is launching their own chain. Like, at what point, I mean, interoperability and all of these things become a concern, of course. But Circle has their own chain. Stripe is doing their own chain. Like, for stablecoin, do we need so many chains?

Saumya Saxena (Base): That's a good question. I feel like it's more of a design preference, right? So I think the question is not, like, do we need so many chains? It's like, what is the right chain and, like, stack for you? And our goal is to make base the default stack for anyone.

Dhruv Sharma: But while you say that, Soumya, is the... architecturally, is base design in such a way that it can coexist with other chains and just be like multi-chain formats that... And can you also give us a sense of how many applications already running on base? How many developers, you know, are you impacting on an everyday basis? And what the aspiration is to go from, like, where are you guys going from here?

Saumya Saxena (Base): I mean, like, to answer a final question first, like, we want to take over the world. And that comes with, like, it's gonna start... I think the goal is, like, the stack is permissionless. The stack is, like, anyone can build on top of. It's so much, like, easier, sharper. It's cost efficient to build on top of us. But there's also, I mean, even if you leave aside, like, you know, blockchain benefits, it's just... If you're a founder that is building in a competitive space, like, you should spend your time here. Because I think, like, the bear market and the prices have impacted people in such a way where all the tourists have left. So if you have conviction and if you're like, this is a great design space for a smart money... Like, Amit is a great example. And I've seen them go from an idea to when they, like, came to basically... We run this, like, Basecamp sort of initiative. We invite all founders, all the base community to... Last year, I was in Vermont. And it was just an idea then to seeing them crush it over the last year. It's been beautiful. And PRED is just one of the teams, right? Like, that's been building an exciting new sort of product.

Utsav Somani: So let's talk a little bit about the community as well. What is the number? And when does a community go from just existing on a Discord server to actually having incentives to help and support each other?

Saumya Saxena (Base): That's a good question. So for us, it's been... Like, the community is actually lives across, right? So it's got, like, large community on Twitter, large community on Discord, on Telegram, lots of subgroups and around different themes and different product areas and issues. And I don't know what it takes to, like... It sort of found its own... It's its own living, breathing thing. Like, it's people coordinating, people doing the work for base, people reaching out that, hey, we've been bringing other people together. We've been building. How can we best, like... How can we build a startup? How can we build a company out of it? And then the beautiful part of being a decentralized setup is that you live everywhere all at once. And you've got people supporting you for it. There's no incentive yet, because we do not have a token. But we would like to mention how we are like...

Utsav Somani: Let me flip the question. Suppose, I mean, you allow everything under the sun, but what is something that you would kick people out for?

Dhruv Sharma: I want to piggyback on that question, Soumya, which is you said it's like... You said a very interesting phrase, which is all the tourists are gone. Do you think this time around, the crypto bros are going to permanently close their doors to non-believers? Or are you going to still leave it open?

Saumya Saxena (Base): No, I think it's... I feel I was a non-believer once. And this friend of mine sort of like... I used to think crypto was a scam. This friend of mine who was with me during my crystal days, he was running a blockchain project then. And he kept telling me that, hey, like, why don't you read about it? And then one day, I finally decided to spend time and realized that, okay, maybe there's something to it. And that led to lots of conversations. So I feel like we won't close the door on non-believers because everyone was a non-believer once. It's a matter of spending time and understanding the space for what it is versus believing and listening and hearsay. So I think what I would recommend everyone do is before you discard this as a segment or a design space, spend time. Spend time chatting with Claude on what do you think where the gaps are? How does this honestly solve? I've got projects that have done incredible work. There's a drone project in Maharashtra that started off with selling drones. And now that is using, selling decentralized data to grow the drone network. Another EV project, which has set up charges all over India and SF and Dubai, which can only do that because it is decentralized and because the financing mechanism is allowing retail investors to invest early in these like charging devices and power it. So the financing space is actually, the whole capital coordination piece I spoke about earlier is very, very interesting. And I highly recommend people spend time on it.

Utsav Somani: Naval, I think said somewhere on a podcast that crypto might be the currency of agents and the world of AI that's coming up. So base has an MCP, you have agent care. And so agents can finally hold their wallets in crypto and start spending crypto. Is that something that you're seeing a lot of happen? I mean, a lot of this happening anytime soon?

Saumya Saxena (Base): I mean, it's already happening, right? Check it, check out Bank of the World on X, check out virtuals in the project. Lots of these, in fact, look at Exponore tool and the like protocol that we've helped build. It's 90% of those transactions are on base, like I think did some $2 billion in volume. And this is just agents trading and investing and buying different things. So it's a matter of, it's already happening. It's just that like, or like people that are not very crypto native do not see that right off the bat. And I feel like because like your timelines would look different on Twitter and you would not have access to the same information that I do. But it's happening. It's very real, it's happening. I remember I was listening to one like Nikhil Kamath podcast earlier. He's speaking about this use case on trading and speculation of, you know, and agents being able to do this. And I remember thinking this has been happening in crypto for the past three months, right? So I feel like the crypto industry is like three to four months ahead of what's happening elsewhere. It's just a matter of looking deeply into it.

Dhruv Sharma: So I mean, I remember like, you know, the discourse in mainstream media and, you know, the bankers and like even Jamie Dimon for that matter, he used to be a non-believer. Now he's like a semi-believer. A lot of them would draw a distinction between Bitcoin, the asset, and then blockchain, the technology, right? And they would always, all of them would say some version of, hey, we love blockchain, but we're not quite sure about, you know, Bitcoin and all of the other coins, et cetera. My question to you would be like, you have a global role, if I'm not mistaken. Where in the world are you finding the most permissive regulatory environments in terms of, you know, actually building on-chain implementations for real world use cases?

Saumya Saxena (Base): Yeah, great question. I feel like Dubai and the WADA regulation have done a great job. US with the Clarity Act has been, you know, a genius in clarity. It's been helpful to set like some guardrails and now the world is catching up. Singapore is also like MAS's front and center of what's happening in crypto. So I feel like places where regulations have been friendlier with tech and these asset classes has been, have naturally attracted, the capital have naturally attracted those builders.

Utsav Somani: So these are established ones, but do you have any like two, three upcoming ones that you would place a bet on as regions?

Saumya Saxena (Base): I mean, yeah, I feel like Kazakhstan I saw recently with network school earlier and even with, I think, they did a partnership with another blockchain recently. There's also Portugal has become like a big hub for crypto builders. Switzerland also somewhat crypto friendly. The European regulations, I think, have been like coming out more and more like friendlier towards crypto and crypto builders. I like Dhruv's point on moving the assets away from the technology because the technology is beautiful guys. So spend time understanding the technology and assets is like, it's you spend time whether you find belief in a particular asset class and it's just like another asset class. And Soumya, you've written about the Manipal mafia, I think, a few times. So I mean, for our listeners who are tuning in and hearing about Manipal mafia for the first time, what are some of the names that you would highlight? Oh, I mean, Dhruv is here. So I'm going to highlight the mafia now. Dhruv is mafia. Yeah, but I feel like a lot of people, right, like Sukul, who's Jitesh, you would know. So Jitesh Luthra, Ishan Sukul is the founder of CRIO.

Dhruv Sharma: How can you miss Satya Nadella, Soumya, I think.

Saumya Saxena (Base): I mean, I generally feel like the Manipal network is, you know, it's people that have some degree of entrepreneurship from the very beginning because you're constantly bringing people together, very constantly. Like it's a weird environment to live in a student town and it shapes you in a particular way. So I feel like that's why we've gotten like a lot more success stories than say other colleges.

Dhruv Sharma: I'm sorry, I was just going to say, we have the head of design of one academy who's also an alum. There's Dil Vaz, who used to be our building site. So yeah, I mean, we were talking about a friend, Ashwin, you know, quick shout out to him of me.

Utsav Somani: A lot of great people. All right. I mean, I'm going to invite the fourth person into the room as well. Amit from PRED. Welcome to the show.

Amit Mahensaria (PRED): Hey, thanks Utsav. Nice background. It's refreshing to see.

Utsav Somani: Thank you so much for coming on our show, Amit. We were just talking about you as well and prediction markets have, I mean, been decided as the winning use case of crypto or on-chain world and finance. So I think it's good to have you here and coincidentally, you're building on the base L2. So I think it's good to see two builders and one builder and one community builder here. So I mean, do you want to give a quick one, two minute intro of PRED and then we can get started with you.

Amit Mahensaria (PRED): Sure. So what we are doing Utsav is we are building a permissionless sports prediction exchange. I think prediction is one of the most primitive human emotions where people want to express their views and we are giving a financial platform towards it. And we are starting with sports because sports is most passionate. There's continuous views. Most of the people are engaged in sports and that's what we are doing. So building a sports native exchange and base has been our preferred choice. We started with base, have been building on base and I was watching Soumya's podcast while you were talking about it. In fact, one of the things that I found is permissionless is something that excites us. As a founder, you hate talking and doing bureaucracy and business development. You take a stack and build on it permissionlessly. I think that's what base for me is about. There's a community which is bound together by a common conviction that yes, decentralized and permissionless is the way to go. So that's what we are doing.

Utsav Somani: And building on base, I mean, there must be some hard technical things that you might have had to answer before you chose base, right? I mean, you need like millisecond execution for trades, like suppose somebody is getting a red card in a football field. All of that must be enabled via base. Like what were the other technical decisions that you had to cross off your list before you chose base?

Amit Mahensaria (PRED): Sure, so first Utsav, to be honest, I don't think base is there yet. So when we were choosing base, when we were analyzing base, the most important comfort that we got is that, yes, the team is investing in future. I think the latency, etc. And this is not for base also, general crypto blockchain technology. It's still evolving. So when we looked at it, I was building for next five years, 10 years. I wanted to partner with someone who might be 90% or 70% there for me today. But I know in three years, it will meet my requirements. And as you rightly said, sports move very fast. Like imagine a basketball game within seconds, the game would completely turn. People watching live match would put trades, would flip trades and everything happens in milliseconds. So speed and scale was important for us, which base gave us initially, to be honest, right now also our order book, where people can see their placing trades is off chain and the whole settlement matching trades, everything is on chain. As we move ahead, I'm pretty certain we'll be able to bring our order book also on chain because base has been investing. So I think more than analyzing their technical prowess today, it's a bet on future. Like many, many, as I took bet on the, my startup, I took a bet on the chain also. So that was what led me to start. And last but not least, I love the documentation and I've talked to Soumya before it. Sometimes we try the newer chains who might be slightly ahead than base. And every time I was in the Discord group, in the Telegram group, asking for documentation, how do we do? Because every startup would serve, has some unique complexities. So the chain should be mature enough to handle that.

Utsav Somani: So Soumya, do you share like, I mean, documentation and also other things, including a roadmap? Like, is there a community-led roadmap as well for base?

Saumya Saxena (Base): I mean, we factor in a lot of like, community feedback and share our roadmap in the open. So it's more on like, how we're scaling. And the goal is like, we've, like Amit said, we've increasingly gotten faster, increasingly gotten more cost efficient. We recently announced our own stack, which is like, we launched the B20 token standard. We have, we've gotten, I think we're taking as much feedback from the community on what do builders and founders like Amit need, and then keep building it into the stack. And like, moving into our own stack allows us more flexibility to be like, just faster and meet those requirements in a more efficient way.

Amit Mahensaria (PRED): So I'll tell you a small trivia. When we were starting, in fact, we had decided on another chain. We were in New York, meeting the founder and CEO of that, another chain, I'll not name it. But we were getting a red carpet treatment, like showcasing Pred as their smart or the first app kind of thing in the prediction market. What happened during that time is, we got this roadmap where we knew they are launching flash blocks, which was increasing the speed by close to 5 to 10x. And these kinds of small things that you need as a builder helped us move into base, take the final decision that we want to build for base. Because you can't do chain hopping every month here and there. So you have to take a slightly longer term call.

Dhruv Sharma: Fantastic. Amit, while we have both of you here, I want to get your thoughts on this, on these things that we keep hearing with respect to what you're also doing. And I think for the benefit of our viewers, while Amit is Indian, and I'm sure a lot of his team is also Indian, Pred is not available in India, is my guess. And it is geo-blocked because the environment here is not favorable to it. But back to my question, guys, I mean, people will sometimes talk about prediction markets as a truth machine. Why do they say that? Amit, you said that prediction is one of the oldest surviving ways for people to express their views. But then the thing is, people get rewarded only for being right. I mean, I can't think of, forget prediction markets, any market where someone gets rewarded for being wrong. So, like, you know, even from a philosophical standpoint, how do you guys think about your, you know, what you've chosen to be your work for the next 5, 10, 15 years?

Amit Mahensaria (PRED): So, it's very philosophical. Sometimes I talk about it, that talk is cheap. To put your views out and say anything is very easy. And not being political, let's say today I'll say, hey, in this election, Rahul Gandhi is going to win. And I'll talk very forcefully, very passionately. But the moment I have to put some financed words some money towards it, suddenly, I'll go back, I'll count my words, and I'll see what is the real probability of it happening. The moment you put money behind it, some truth starts to emerge. That's one. I don't know, there's a very famous book, you've heard of it or not, Wisdom of Crowds. Even if people want to be truthful, you bring a large group together to predict on something, put their money behind something. They are mostly more accurate than experts. Let's say if you are looking at dairy product, there's a group of cows out there giving milk. You bring a cow expert or a dairy expert, the wisdom of crowds in a controlled setting would be much accurate than an expert. And that led us to believe that yes, crowds, if it's not fixed, etc., if it's not designed to be cheating, crowd is more accurate. The truth emerges better. So that's the philosophy behind it.

Utsav Somani: Yeah, my two cents on this is like, think of this as like the, you know, Kaun Barega Karupati Gay. And you've got an audience poll where sometimes the audience will make you win. But there were times that the audience would make you lose because the audience has no incentive. Like the moment it was their own money they were putting in, you would see the truth like 100% of the time, all the time. So I feel like the truth machine piece is real. And it's been interesting to see how it's come through. And this is not just for politics, it's for any truth. And like you could apply the same concept to rumor mills and gossip and all of that and it would still work.

Amit Mahensaria (PRED): And there's no better joy than thinking you winning on your predictions. Yes, if you're wrong, you lose it. But if you're right, it's a great joy that you predicted something and you made money out of it.

Utsav Somani: All right, Soumya, we'll continue with Amit to close the show. Thank you so much for coming and enjoy Amsterdam.

Saumya Saxena (Base): Awesome, thank you for having me, guys. Thank you.

Utsav Somani: So Amit, I think prediction markets are very, very clear. Like I think there is a lot of noise around it and also some large players have emerged in this space globally. Right, I think everyone's heard of Polymarket, Kalshi. Why do you need a specific sports market or a sports exchange?

Amit Mahensaria (PRED): So first, Utsav, this is my hypothesis and I still need to prove it correct. I like to cite this analogy many times. You don't buy your spectacles from Amazon. Amazon might be the biggest player. While I was at my previous company, UpGrad, I used to see how Piyush Bansal used to think about lens cut. So similar to that, since lens buying is a very different buying behavior, has very different characteristics, which a general behemoth like Amazon might not fulfill. Similarly, sports is very different from general purpose prediction market. And my hypothesis is, if you zoom ahead five years down the line, sports will be a verticalized play which won't be owned by Polymarket and Kalshi. Would it be owned by Pred? It needs to be seen. Would it be owned by Novig and many other players which are coming into this space, building for sports? That needs to be seen. But one very important thing is, there's a distinction. General purpose prediction markets are built for events which are going to happen in future. Let's say election or any other event. So they'll predict this would happen in that event. Sports, what happens is, 90% of the trading happens on match day. It's more engagement-based trading rather than event-based trading. Now, general purpose prediction markets are not designed for that. Polymarket, Kalshi, they added sports as a category and now they are getting a lot of volume around it. But truly, though I many times criticize sports book, I'm a big fan of their UX design. They have designed sports book, have designed for the live match environment.

Utsav Somani: So what you're saying is that, I mean, how the quick commerce industry like Blinkist, Zepto, Swiggy, they're being broken down into different verticals as well. You're seeing that or you're hypothesizing that same will happen for other prediction markets as well where somebody has- 100%, 100%. Whether it's sports, politics, all different verticals.

Amit Mahensaria (PRED): So there'll be not, I don't think everything would be broken down into verticals, but like grocery is a very different buying behavior than, let's say, a mobile phone. Similarly, sports is a very different vertical, it'll merge. Culture would be a very different vertical.

Utsav Somani: They are prediction markets. Suppose $100 is traded on Polymarket and Kalshi combined. How much of that is sports?

Amit Mahensaria (PRED): So sports currently would be close to around 50 to 55%.

Utsav Somani: Oh, wow. That's a big number. That's a big, big number.

Amit Mahensaria (PRED): So sports, and it has unique characteristics. Like I sometimes cite example, in a single match, Polymarket would have 25 to 30 options who will win, etc., etc. Stake or even FanDuel, etc., which have been there for decades, have 200 to 500 options to play. So sports has very different, unique requirements. I'll again give another example. In a live sports, you're watching and you're predicting something. If it happens in the 7th minute, you are proven right in the 7th minute and you can collect your winnings on bread in Sportsbook. Whereas on Polymarket and Kalshi, you'll have to wait till the match ends and after a couple of hours, resolution happens. So it's a very two different world. I personally believe Utsav, culture, sports, finance, and rest all like geopolitical, etc. These would be some of the key verticals, where culture and sports definitely would have its own native prediction markets.

Dhruv Sharma: Amit, I've never tried my hand at sports betting. So I'm going to have a lot of nude questions. The first of which is, so the World Cup just happened, right? I would imagine that was maybe the most, the largest event you've covered on thread up to this point. So what are people betting on? Are they just betting on the final score or who's going to win the match? How granular is the betting? Are they going to bet on the next 10 minutes, the next 15 minutes, a free kick? Tell us about that as well.

Amit Mahensaria (PRED): Sure. So one, the whole hypothesis group is, I'm actually changing this industry from betting to trading. Till date, what was happening is, you post a trade or a bet and then pay for the final outcome. I'm actually financializing this whole betting industry and making it trading in areas where it's regulatory allowed. So like in India, we don't operate, but our team is also not in India. We have a global team outside of India in multi locations kind of thing. So what we are doing is, bulk of the trading, 70% or 75% happens on winner markets. Who is going to win? People place their trades and after that, when the match starts, people want different options. Hey, this is the player who will score a goal. This would be the exact score. This is the time a red card would happen. And sports is very engaging. The moment you watch a match for five minutes, you'll have your views, which you'll be sharing with your friends. Hey, this time this is going to happen. Virat Kohli will score a century or Bumrah is just rocking and firing today. So those views, people start to put their money on. So that constitutes close to 30% of their trading. And another beautiful thing is, even the 70% which people put on winner markets, you'll see half of that changing sides. As you watch match, you'll feel, hey, no, today is not happening right. You'll flip your positions. So all that is a live trading environment. Whereas in elections, you'll not see this. You'll take a position and then you'll wait for final outcome when the results are announced. In sports, people flip their position. People flip their views multiple times.

Utsav Somani: And how do you think about building? Sorry, Dhruv.

Dhruv Sharma: I was gonna ask also for us to have a deeper understanding of the mechanics of this. Amit, explain to us, who's on the winning side of the trade? Who's on the losing side of the trade? What are the execution mechanics? How do you do settlement? My guess is a lot of builders watch our show and they'd be very interested in knowing all of the behind the scenes stuff as well, in addition to some of the high level things we end up discussing anyway.

Utsav Somani: Basically, I think Dhruv covers my question. I was gonna ask about liquidity because given that you're new and you're building a marketplace of sorts, like a marketplace of opinions in the sports world, then how do you find price discovery when liquidity is low?

Amit Mahensaria (PRED): Sure. I think that's a very relevant question. And to be honest, one of the most challenging aspect where I'm spending bulk of my time. But I'll go slightly back the history of this whole thing. So this industry sports trading is dominated by sports book, which are also known as bookies. They constitute 86% of the market share today. Now, what happens in a sports book when Dhruv, you want to take a view, let's say in a match X is going to happen. Your counterparty is that sports book. You are betting against the sports book. That means that if you win, sports book loses. Now, when they are listed companies like Flutter and FanDuel, etc, listed companies, they're reporting in their financial standards is their revenue is exactly equal to user losses. The number of users who've traded plus sum total their losses, that's their revenue. Now, think about this industry whose revenue is exactly equal to losses. That means anyone who can win, anyone who's smart, they start banning them. They start actually banning the winners. You can't think of any other industry which does not celebrate its great players. Like think of the hospital, they'll celebrate their best doctors. Think of any other industry. And only in sports trading, you actually ban the best traders, best predictors.

Dhruv Sharma: It's like heads, I win, tails, you lose, those kind of situations.

Amit Mahensaria (PRED): In a sports book, what happens is sports book provide their own balance sheet, their own liquidity. Why I'm telling you all this in answer to your question is you need to understand the genesis. Now, when you build an exchange like PRED, we don't care. We are just a tech company building their financial infrastructure. Like similar to Zerodha, Zerodha doesn't care, Reliance goes up or Reliance goes down. We don't care what's happening on the markets. I'm just providing the exchange infrastructure. Now, users can come and they can trade with each other. Now, the biggest point which you were mentioning is if I am coming at a, let's say, 601, I need a counterparty. So what happens is you onboard market makers which provide both side liquidity. So as PRED is building, the biggest task of mine is onboard a lot of sports market makers because if a user is coming and they don't see liquidity, they'll be turned off. And if market makers don't see users, they wouldn't provide liquidity. So it's like-

Utsav Somani: Who is the citadel of sport, Amit? Who are the market makers?

Dhruv Sharma: SIG.

Amit Mahensaria (PRED): And they are still not on PRED. So I need to bring them. That will be a big- Who is it? SIG? Yeah. SIG Sushehana Investment Group.

Utsav Somani: Oh, yeah. They're one of the venture investors as well. I didn't know that they were into sports betting as well.

Amit Mahensaria (PRED): Yes, yes. So in India, they are into venture side but Sushehana has multi-billion dollar books doing market making for sports.

Utsav Somani: Wow. So they basically take over a portion of the liquidity for you or drive liquidity by taking the bet on the other side.

Amit Mahensaria (PRED): Yes. So I like to give example of Uber many times. When Uber came, the cab drivers were the market makers and users were the users. So I need to bring in both. So today, we are actually investing our money, fundraise money to onboard market makers. We are actually incentivizing them come and provide liquidity on PRED. We are incentivizing users come and drive PRED. As more and more users and more and more market makers would come, then it's a self-fulfilling prophecy.

Dhruv Sharma: Speaking of incentives, can you tell us what the spreads are like on all ends of the equation?

Amit Mahensaria (PRED): Sure. So it depends. But to be one thing which was really proud for us, we just launched for World Cup. In World Cup, we were consistently among the top two lowest spreads provider. So in all the World Cup matches, they were independent bodies like Predictify and others who studied and who were posting their results. So typically, a spread ranges from 3% to 4% today. Now, imagine it from the stock market where the spreads would be less than 0.1%. So still, there's a lot of improvement. The spreads are also a function of volatility. Pre-match, the spreads would be closer to 2% to 3%. In a live match, suddenly spreads increase because the risk is very high. But there's a huge scope of improvement compared to Sportsbook who charge 10% kind of thing vague or commission on every trade. It has already come down to 5% to 6% or 4% to 5%. And I personally believe when it will come down to under 1%, that's the time when sports exchange have truly arrived.

Utsav Somani: And what's your take rate on a trade?

Amit Mahensaria (PRED): So today, we are charging nothing. We are not making money. I think our fees are zero. So whatever money, it just transfers between users. As we move ahead, we are looking at somewhere around 0.5% kind of thing from every trade. Just like any trading exchange would charge a brokerage, we would charge on every trade irrespective of who's winning, who's losing.

Utsav Somani: And by being part of OnChain, you're global by default, but are there certain jurisdictions like India, Singapore, or any others that you've switched off?

Amit Mahensaria (PRED): So what we are doing is we have actually geo-blocked a lot of jurisdictions which are very clear about regulations. So we have geo-blocked US, Singapore, India. And as we move ahead, I personally believe Utsav that the regulatory arbitrage is not something on which you can build a long lasting company. We'll reach out to governments, we'll understand their regulations, and we'll actually invest our resources and money to be regulated. Regulation and decentralization can very well go hand in hand. While we'll be decentralized, while every of our trade can be verified on chain, we'll still be regulated as and when. In fact, I'm very eager when India opens RealMoneyGaming, I'll be the first to reach out to Indian regulators and apply for that license. Comply with that requirements and maybe then launch cricket. Today we haven't launched cricket. We have only launched soccer. So that's the long-term game for us.

Dhruv Sharma: Speaking of, what sports are available to trade on, Amit? And I'm so curious, which sporting event so far has seen the highest trading volumes on Pred?

Amit Mahensaria (PRED): Sure. So right now, it's only soccer. We started with soccer. And as an interesting trivia, when I was pitching to Excel Coinbase, who are our investors, we said we'll launch with five sports. And I'd identified a list of five sports. When we started building this exchange through, we realized every sport has a unique design requirement. And then we limited ourselves, focused only on soccer or football. That's the only sport that is... Which is the world's largest sport anyways. So I think you'll be overcut out. Yeah. So we cut out all other sports. This month, we are launching basketball, American football, which is rugby, and tennis. So three more sports are being added. But we took one year to actually nail only one sport, which is football.

Utsav Somani: I think just be ready for cricket by the time IPL comes around, I think, next year.

Amit Mahensaria (PRED): I'm so excited about cricket, but I think we'll launch it when we are ready with the right regulations. No point... As a founder, you don't want to be distracted with regulations. You want to build...

Utsav Somani: No, but I mean, global... I mean, predictors or traders of these sports markets, will want to bet on IPL as well, right?

Amit Mahensaria (PRED): Yes, but the problem itself that happens is, suddenly, bulk of the trading volume is from Indians. And I don't want that to be on my platform. So it'll be tough to get market makers. They'll go to a platform where Indians are there. So it's really tough to get better spreads. It's really tough to give a great experience to users of cricket. And that's why we are not launching it yet.

Dhruv Sharma: Amit, maybe one question running through my head is, if you really had to do prediction markets, and if for some reason, sports was just not on the table, let's just assume that, right? What would your second best pick be?

Amit Mahensaria (PRED): You're stumping me. By the way, I've been a sports trader for past 22 years. And I've been running a sports community for past seven years. I think my whole passion comes from there. I think that's the answer. So please. But having said that, I really like the financial markets. Because there's one thing which is about stock prices, which there are a lot of exchanges on. But in every finance sector, there are multiple views. I love to predict, hey, this is the time these results are going to come. This startup is going to break out. So this whole illiquid market around finance, especially startups, which I love, I've been a startup founder in Web2 before. So that is one thing that I would love to predict. Love to predict about, hey, this time I'm pretty certain OYO is going to do X, Emergent is going to do Y. So that's one market that I'll trade on. And maybe I'll build on.

Utsav Somani: So PolyMarket as a final closing question, PolyMarket and Kalshi have sort of embedded themselves in cultural, I mean, talk, right? Basically, I mean, like hip hop songs being written about them. There are traditional exchanges as well, like Betfair, where you can do liquidity on markets like this. So what do you see as PRED's biggest challenge and hurdle to overcome in the next year or so?

Amit Mahensaria (PRED): Sure. So I think, Utsav, for me, the biggest thing is actually creating a network effect. If there are more and more market makers and my users are getting better prices, they'll actually ride with us. And second thing is speed is most important. If you see PolyMarket and Kalshi, they think in hours or days. In sport, you need to think in seconds. Your trade needs to happen in milliseconds. Your resolution or people want to get access to their winning in seconds or minutes. I think speed and better odds or better prices for users. These are the two core principles or promises that I'm making to users. I think as we'll grow more and more, as users would start loving trade, coming into mainstream culture would be a thing that will be a byproduct.

Utsav Somani: Awesome. Amit, thank you so much for coming on TON and wishing you the very, very best as you build this out. Thank you so much.

Amit Mahensaria (PRED): Really nice talking to you, Utsav. Thank you.

Utsav Somani: All right, listeners, that's it from us today. Let us know if you enjoyed 6 p.m. as a time and we'll try making some of our other shows as well at 6 p.m. but 4 p.m. on Wednesday. That's when we'll see you next. Bye-bye.

Saumya Saxena (Base): Cheers.