DeFi Roundtable: The Path to Decentralization Ft Radix, MakerDAO, Chainlink, Aave, Argent, Messari

[Music] hello and welcome everyone um this is the radix d5 round table uh we will be doing an hour and a half deep dive into the path to decentralization of finance and a few juicy topics along the way super happy to be joined by the folks we have here today and to kick it off i'm going to hand over to our moderator jack from asari thank you for that introduction um thanks everyone for for joining we have a awesome panel we had uh with some of the most interesting projects in my opinion uh helping to shape the future of d5 um so to kick things off we can do some quick intros uh i'll start with myself um so as peter said my name is jack uh i'm a research analyst at massari which is a uh market intelligence service uh for crypto um i'm a research analyst in the space so i spend my days reading and writing about d5 all day long and uh even then still feel like you can only keep up with ten percent of uh all that's going on due to the insane pace of change um due to a lot of what these uh these guys are building so without further ado i'll let them kick things off with their introductions so i'll go first uh my name is piers riddyard i'm the ceo of radix um radix is a decentralized finance pro school specifically focused on bringing decentralized finance into the mainstream and solving all of the problems that is currently faced by platforms like ethereum with things like scalability issues as well as things like composability and making sure that the writing centers are in the right places for communities to be able to build effectively on public ledgers um i'll uh pass over to stanley for the next introduction uh yeah i'm stunning i'm the founder and ceo of ava and in ave is a money market protocol on ethereum and basically what it allows you to do is to deposit cryptographic assets such as stable coins and earn interest and also you have a credit line to borrow other assets we started a couple of years ago with eatland which was uh first learning protocol and the current the the money market protocol of we launched on january and since has since then has been grown substantially hi i'm matthew from argent i'm the head of strategy and operations arjun is a smart wallet for ethereum offering uh one tap access to the best of d5 protocols like are they but also compound token set maker uniswap and others and also we offer kind of peace of mind through things like daily transfer limits being able to lock and unlock your wallet in a tap and then waitlist contacts awesome hi guys i'm johan so i work on everything that's integration related over a chain link training is basically a decentralized oracle network giving out currently i mean our aim is ready to give out oracle functionality to the whole space and to any use case we've been mainly focusing right now on price feeds and financial instruments that g5 projects can leverage to get the tools they need to basically build their applications so yeah hi guys i'm greg deprisco i'm the head of business development at the maker foundation the maker foundation is the entity that shipped the original code for what became maker dow which is now a self-governing organization that produces the stable coin die awesome so to kick things off uh i think it would be kind of pertinent to talk about this balance between centralization and decentralization where in order to kind of like fulfill the right ethos of crypto a lot of these d5 protocols the intention is to be these community owned um protocol that are absent of like any central point of failure but uh with that being said like that comes with trade-offs of um you know efficiency given that decentralized governance like it's it's hard and takes time so i think it'd be pretty start with stani given uh you guys recently made some pretty major announcements on ave's plan uh towards that uh more gradual decentralization so i think uh i'd love to hear your thoughts donnie on if you think that that's uh an effective way to think about it where you know you can start out as a more centralized company and then work your way towards uh giving more rights to token holders over time or what are your what are your thoughts around that yeah actually that's uh that's quite a interesting question jack because like it really depends on what you're building and what kind of model you're uh searching for and also kind of like what's what's uh kind of like the sufficient decentralization uh is because uh in some cases like if you think about decentralization i see it as security and and security brings additional uh costs whether it's it's basically the underlying network uh the blockchain network or a d5 protocol and and basically how i see it it's going the the vision here is that um you need enough uh basic decentralization that you have security in the protocol that allows those kind of like permissionless non-custodian functions without uh violating uh this particular properties and i think in in many cases uh many of the development teams they definitely start from quite zero so you you need to somehow obtain funding or somehow to get uh get moving and and in most cases it has been in in past with a some sort of a sale or private sale or equity rates and then basically uh kind of like converting into a token or doing it with uh with the liquidity mining but uh i i think like uh definitely like it's it's a path it's a journey i i it's very difficult to be from the day one and most uh kind of like concerning aspect there is that uh if there is some sort of uh misconfiguration or uh some issues with the design of the uh protocols uh then it's very difficult to um kind of like uh quickly apply changes if if you don't have uh kind of like a genesis centralized um team there but end of the day kind of like taking steps toward decentralization is that what uh i see that most of the d5 protocols are taking and that's that's what we are doing at ob as well and the the autonomics that we published is basically a kind of like a i would say like a road map on how we're going to transform for what we are today and and and basically to be more decent so i said uh we kind of expected to um take this decision a bit later but uh the amount of uh value that is locked in our protocol kind of like urges us to do it uh more sooner uh than later yeah that makes sense um so greg i think this would also be uh a good question for you given maker's been they've you know had a decentralized governance process for quite some time it's very established now and you probably know better than most the the difficulties that come along with that so do you kind of agree with that sentiment or do you think it's possible for uh a project like um yearn where right they're trying to just release tokens in the wild and say you know governance just like do your thing i i don't know the answer to the second part of your question because that that is something that can only be tested empirically i i think the important takeaway here is that decentralization is the innovation of our companies that there's a bunch of other things that we're doing touch on innovation but the only actual innovation is the decentralization itself and the pace of that innovation is going to actually decide which companies are the most successful in my opinion so if yearn can do it in a week then you know they're i think they're going to be spectacularly successful because that means that they've innovated faster than all the rest of us i don't know if they will be able to do it in a week because as you pointed out we've been in the trenches with this stuff for several years now and it's you know it has its ups and downs but uh innovating is hard i i i almost think of uh the history of roads so you know if you think about the way roads operated in the united states prior to uh i think it was the civil war they uh they were private they were private structures that were used for the benefit of their owners and you know people soon realized that this infrastructure was just too important to have in the hands of a few people so roads became public goods and i think that's the the trajectory that you need to see these d5 protocols take where rather than handing it over to the state you're handing it over to a group of incentivized participants that can govern this infrastructure like it's a public good and therefore have the same perverse incentives that a small group of controllers would have yeah yeah that's that's a really good analogy actually um i haven't heard that one but kind of makes uh makes a lot of intuitive sense um so then matthew so i think as a centralized like company that is building on top a lot of these like base layer protocols you probably have a bit of a different view here uh and so i'm curious to hear like as uh right this the central centralized company but like you still have stakeholders you still need to create uh a business on top of that like how do you guys think about value capture in a world where like everything's open source like there's very little switching costs like between protocols um yeah um it is a very good question and i see that you or someone in your team is just posting about how aggregator theory applies to argent and other wallets and i think yeah i think you're unlikely to see a specific project own a consumer relationship in the way that aggregator theory is sometimes applied to people like netflix and in a sense as participants in the crypto world we don't really want to own um you know a consumer relationship in that like locked-in sense that's not really the point of crypto like of course we want to grow our user base um and of course we want to add value uh for the stakeholders of arjun but we're not looking to lock certain people in so yeah it's super easy to leave argent um if you're not liking what we're building and we've kind of even though we're a centralized uh company building the wallet we've always ensured that the fundamental aspects of it are decentralized so argent can never touch anyone's assets and we can never block anyone from using their assets and you can even use any other ethereum wallet to move your assets out of the origins and i think that's really important to build trust with the community um and yeah i haven't really had enough time to suggest your kind of the tweets on the aggregator three points but i think there are some things that you know even though it's open source and it's easy after a while the project does build up a reputation um it does build up trust with people which has been really important in this space and we're seeing over time people add more and more assets to argent as they hear from word of mouth and you know the more assets in you can kind of take it over time that maybe it's getting safer and so we've now got wallets kind of without and actually a few wallets with over a million dollars in them and i think that's not so easy to suddenly switch to a new project because they've got to go through that have again the years of audits and battle testing so i don't think it is super super easy to say that we'll never kind of capture the relationship just on a couple of the things that people have been saying i think there's like i think we often lump decentralization into one big topic or it can end up being lumped into one big topic but there's this uh i think there's several sort of like key points inside the concept of decentralization that that it's nice to sort of tease out the first is this this idea of anti-fragility right which is like we want to make sure that if if any of our companies blow up that what we built keeps going that if there is a utility and a function that that is that is useful for the communities that we're building up that that can continue to to go for like way out live the the people that designed it the people that created it that you're trying to create a perpetual motion machine that is building value for the people you care about right um and that's that's sort of the anti-fragility on sort of two levels the first is from the point of view of the protocol how do you make it so that the protocol is a self-sustaining uh entity that grows and builds brings value in and brings in users and brings in developers and then the next level up like as a as a application creator how do you make sure that what you've created fundamentally can can outlive what you what you guys what the team that first built it which is a fundamental difference from like a bank or or something like that but from um from the uh from the other side like we often talk about decentralization from the point of view of governance and decision making um and that is that's a that's an aspect of of of anti-fragility but it also like often has a load of problems with things like not getting sufficient um uh buying from the community because they just don't want to vote more than anything else or like not actually not actually getting the engagement you need to be able to make decisions and that often ends up with some forms of centralization where you're like okay well we're going to have some sort of representative democracy or we're gonna have some sort of like smaller class of entity that we decide should be making decisions for the good of the community you want that to be able to have you know to be anti-fragile but it's not necessarily decentralized in like the way that you often think about a protocol as like that something can blow up like if the people that have been appointed to be those representatives disappear you're going to end up sort of um in in a similar problem um that will take a long time to recover from and then there's this last aspect of like interoperability or permissionless of funds where like it's really important that that this is this is the key in innovation is being able to move assets from any pro from any sort of like application to any other application without needing uh permission from a centralized authority to do so once you own those assets they're fundamentally yours but i think that for us to grow beyond just that now with there are going to have to be like if we want to bring things like um tesla stock or apple stock across to these platforms we need to start thinking about gradations like the protocol matters as a decentralized entity and permissionless and then the the application that's dealing with these assets also matters from that point of view but at a certain point there's an interface with the real world that may actually need a central central body to be able to go between the laws of the land and and what you want to happen on the protocol that's fine as long as it's not breaking the rules that you're setting to make sure that these applications can interoperate and that we can end up like continuing to drive users and values to the cloud these protocols so i was just going to um add to that i think that's exactly like where does where did the various elements of decentralization add the most value to users because for us at the moment it was decentralizing smart contracts the assets building agency that if we disappeared people could still have control of their assets but actually to make the decisions day to day and to actually build the product in our first couple of years it made sense to operate like a traditional startup and then gradually over time as we learn more about how these models are working we can kind of evolve to a more open and decentralized model yeah i just want to say that it's interesting to me that we're seeing this friction and kind of desire for decentralization in legacy companies as well you know you've got the biggest tech companies on capitol hill this week talking about how they don't have monopolies and stuff where it's obvious that the internet's network effects lead to natural monopolies and the friction is not in the fact that these companies have them it's in who controls them and it's pretty everybody pretty much agrees the government shouldn't control facebook but we all kind of also agree that maybe mark zuckerberg should be the only person that controls facebook so it i think there's just this obvious need for decentralization all over the economy and hopefully the structures that we're building today could be applied on a much larger scale yeah also i was about to say like some of the aspects of decentralization which are often underestimated is also like someone has to do some work at some point right like if you're going to write smart contracts if you're going to run oracle infrastructure someone has to do this work now we're kind of in uh you know this is crypto space where you have so many teams you have so many great ideas you have something which is always moving super fast right if an application doesn't really decentralize on time and keeps the whole kind of governance process keeps the whole decision process run their own oracles so they have to have their own infrastructure all of this stuff right they not have really the time to iterate or kind of to to focus on the right things right because they're already kind of concentrating all of the powers and something which was really quite fun actually was this when wire and kendo release their first article about why is there decentralizing and why they want to desert this governance process they said explicitly because you're too lazy to govern and here i think something important is these guys are indeed very busy to cut and to do many things at once right like they don't have also the time to kind of oversee the whole way the platform works and decides to look an economy and all of this stuff right so i think that's why it's another aspect which is really why decentralization is enticing in our space because you want to leverage all of these great ideas you have if you want to leverage the great people that's something we've seen with our oracles right like uh you're incentivized as a team to not run your own oracles and to kind of rely on some kind of decentralized oracle network like like the one chaining has for price feeds because you don't want to have monitoring your enterprise fees you don't want to be running your own node you don't want all of this stuff basically right like that's a lot of things which could go wrong and i think that's another aspect of decentralization which is super important and why in the long run i see decentralization winning just because it's the law of of the many instead of the law of a centralized entity which would be controlling something and here if we can see something throughout history including ethereum because ethereum was really the space where innovation was possible compared to other blockchains where you know innovation was a bit more restrained i think what what they showed us is that if you open up the space to innovation and to make as many people iterating as possible and you don't have this kind of force leading the way above and taking all of the decisions this approach ends up winning in the long term right at every step of the way for oracles for governance all of this stuff that's always the right approach so yeah yeah those are all great points and um you're right it comes down to the centralization it's not just like a black and white kind of thing there's there's a lot more nuance to it there's uh many different stakeholders and actors within these uh within these communities uh but piers you said something interesting about right maybe one day like you can still like bridge the world of uh right centralized finance and bring something like tesla stock uh into a decentralized protocol and i know makerdao's done some of this with their right it's a distributed governance process that decides to bring in an asset like you know so far like stable coins or you know i've seen some uh myth nines on like tokenized invoices or like other other assets like that and so i'm i'm curious uh greg to hear your thoughts on the the trade-offs there between like still trying to have the majority of the system you know quote like trustless but then also scaling it by you know if you could tokenize t builds or you know you have the most liquid large asset in the world like that could help die then actually grow to meet its like large goals um you've hit a nerve fyi because the the notion that decentralized collateral is in any way better than having a like a diversified portfolio of centralized and decentralized collateral is i can't stand it it's it makes no sense i mean think of this so right now let's say you have a stable coin that's exclusively backed by ether right what happens if these centralized on-ramps get shut down what happens if tether blows up and all the liquidity disappears from underneath the currency in a day like there's actually more risk to leaning only on these quote unquote decentralized assets that are completely dependent on centralized on and off ramps as opposed to having a diversity of assets which have tons of different ways to onboard for instance you know if you're using some sort of regulated asset hey you have the legal system of whatever jurisdiction that you're registering that asset in to to lean on you don't have to worry just about you know hackers or anything they could steal the asset and you can still get it back but also it's a completely different way to on-ramp into the ecosystem and it's actually the way that most businesses on-ramp into money in the first place in the legacy economy if you go to a bank and you bring them a house they print money against that house you don't have to go to a bank and buy their own currency to then deposit it in the bank and then borrow money that whole concept just doesn't make sense to me so i and also it just doesn't scale you know you can never predict the value at risk of any asset over an extended period of time it's literally impossible i mean so many so many people have blown up trying to do that like long-term capital management's probably the best example but uh it it you know it almost happened to maker with march 12.

Thank god it wasn't as severe as it could have been but the point is that a single asset stable coin that the example that i draw there is like imagine that there is a bank that only lends against vineyards like would would you want to have your deposits in that bank no because they have no diversification you want you want a currency that is backed by a truly diverse form of collateral that diversifies you not just against financial volatility not just against centralization or seizure risk but every risk across the board i'll enter my rent there no i like i just just as sort of add to that i think that is the only way that we're going to grow beyond this of the the crypto echo chamber that we sort of exist in like the um yes there's 250 billion dollars of of of crypto assets that currently exist and many of them haven't yet accessed e5 so there's like a huge opportunity there to bring those in but beyond that like if we're actually serious about rebuilding the financial ecosystem as it exists today to something that actually leverages all of the power that we get from these these these these platforms and services being on a interoperable trustless framework that doesn't mean that the assets themselves have to be trustless they're like stable coins have already shown us what the value of having a the ability to express an off-ledger asset on ledger and then be able to program it that's incredibly powerful but we've like we're only just scratching the surface of what the main market liquidity actually looks like and what's possible to bring into these and like i i would love to instead of having you know i'm going to go hark on about apple but instead of having apple in my like merry trade account to be able to take apple and put it into are they and then be able to get a loan against that and be able to do that in a second rather than it just being on these little islands of nothing that the the they are not compatible with each other and i think that's sort of the underlying power here so it's not not decentralization for decentralization's sake it's decentralization for the things that matter to be decentralized from the point of view of anti-fragility and trust and then getting as many of these assets on top of these ledgers to make them income compatible and to be able to build all of these excellent new things that we're able to do now yeah and i have to agree on the like basically kind of like the i i think when we think about like the discussion of like uh decentralization in terms of like um the the custody aspect like uh there's always some sort of custody risk or like centralized like uh i i agree definitely with with everyone that like we should not think too much that let's say if we have a stable coin backed by only eid that it doesn't have any kind of like uh centralization risk i mean there's always social capital that is intact into that and and and i think uh basically being able to uh have different kinds of assets on ledger like a distributed ledger we we we kind of see that the the the bigger value proposition actually is the uh inter interoperability by default because uh the the biggest thing i see now in d file like for me uh personally is that that the we have quite interesting way of having capital efficiency and moving capital from from one place to another uh we have kind of like not succeeded yet to uh make that capital work uh efficiency efficiently enough because we are looking value so the current metric is that we're looking value into smart contracts and and and basically you you should not be looking value should be basically utilizing it as much as you can and i i think bringing different kinds of assets into um the the the public ledger and and even adding privacy on top uh it brings a lot of valuable uh uh primitives and and efficiencies and if the whole finance was like this by default that could be something very interesting i mean what you're looking with the the um protocols that basically run by themselves is basically being as a infrastructure backbone uh for the the finance and i i think d5 is just one thing uh and eventually it's it's going to be uh basically the backbone of everything else call that will happen on chain yeah we tend to agree also that's i mean to me the main concept of g5 is that at some point it's bound to replace traditional finance right and that in the future traditional finance would basically be what you call today g5 right and to do this you basically bring like you need to bring these assets on board you need to bring you know tesla shares apple shares all of this stuff because once it's tokenized and once it's on the blockchain and once it can interact with permissionless systems and this decentralized kind of governance and communities that's really when you open up a lot of doors a lot of bridges right so i i do really agree with with the points that have been said and yeah i mean also like diversification you know to go back to uh to greg's points uh seems like something which is extremely important whenever you're creating uh a collateral basket for a stable car right then you mean as you you need as much decentralization as possible in my opinion whether it's from custody risk asset or whether there is non-custody i mean there is always a risk as uh as as was being said but yeah so that's my two cents on this stuff if we want to really be serious about this vision for defy and kind of bring defy to the masses we need these bridges with the real world we need to bring all of these assets whether centralized or not to the blockchain and leverage them and let them flow kind of in this economy yeah yeah i i always do kind of find it funny that there's somewhat of some cognitive advancements of like you know crypto purists that say they want a stable coin backed solely by east but like that's not really any more like decentralized in the sense of um like what you want out of that and in terms of mitigating like a blow up risk which again yeah we almost on black thursday and like a more robust system would be one that has a broad array of assets uh with the carefully managed risk systems like we see in the traditional finance because there still is a lot of things like we need to learn from the system that has existed for a lot longer than you know defy but so keep keeping on that trend of bridging the these two worlds right now uh stani um ave recently joined the chicago d5 alliance which for those who aren't familiar uh it's uh an organization that i believe it's like drw jump trading um cmt like a lot of these like big prop trading firms and uh you know traditional finance companies that are starting to work and like mentor these d5 projects and so we're seeing kind of a meshing of both worlds so i'd love to hear like how are those legacy players viewing the space right now is it just kind of like a neat toy are they taking it seriously in terms of the uh broad reaching goals that a lot of us um kind of see for the future and what brought us to our occupations or what are the kind of thoughts there i think i think they're very interesting they're interested in the space like uh what we're doing and also like um in the growth and and definitely like the the value added with what you can have from d5 and and kind of like um d5 always has been a bit of like low in terms of liquidity so so the concept of of uh let's say landing poles or um basically uh auto money market uh polls is relatively new concept a couple of years old uh in in maximum and and and basically now that there's more liquidity it it kind of gets more traction but i think like one of the the challenges is uh there's two challenges i think when we look at the the uh the the prop the trading firms and and then our d5 protocols is that uh first is uh we are still too small so kind of like even if there is some sort of like a business to do like in terms of like uh market making uh making liquidations on lending protocols and so forth it's still very small i mean um 2 billion kind of like a market size is very small and the second is that the the accessibility and and the security so how they can interact with default it's a completely new uh form of technology for for these firms i mean they they have been used to to program things that are related to uh uh stock exchanges futures exchanges and so forth and using uh fixed protocols and so forth so so basically they have completely new thing there and one of the things they're worried uh also is is basically the security um the the hacks this year with flashlights and so forth didn't help help much like to put any comfort on on that space but but the cool part is that um there's more insurance products coming um many of the uh d5 protocols have some sort of like a risk bearing element for example i mean in terms of maker there's there's the mkr and even ave is basically moving towards uh staking and anything uh facility to to basically provide uh this kind of like a safetyness and and comfort and i i think that's something that's uh still a bit of challenging um and of course like uh for institutions that just want to originate loans or uh do basically uh lending activities uh for them privacy is a big thing as well and um yeah i mean those those are the kind of like topics and and the the the cool part is that they're very interested but uh the steps that needs to be taken the tools uh basically statistic data all of those things need to basically um uh kind of like uh uh develop a bit further so i i think we're still we're still not there but we're almost there yeah that was some good inside i i can't imagine uh people accustomed to the legacy financial world realizing that every transaction's on chain and viewable by the entire world i can't imagine it makes them too comfortable but um gas is is one of the things because some of these transactions like what they're used to is very high frequency uh trading like and and then you have a different kind of element now like uh basically where like every participant are paying the the participation cost on spot so that's a that's a new element for them as well yeah um i'd like to open that that up to the other panelists as well if you guys have had any experience um you know we're working with uh the the legacy financial world and like if you've gotten any interesting insights from them on how they're kind of looking at d5 so go on john you you guys actually probably talk to a lot of people uh yeah sure i mean on our side we were kind of looking into how we can get more and more data um on-chain right and this data could be you know it could be commodities it could be forex it could be maybe at some point stocks indices right so surprisingly enough what you're seeing more and more is actually there is one more opening i would say to these new ideas and i even talked to some traditional people who actually heard about if i have never used it right like we can't dream too much but they they've heard of it they understand the concepts so what i'm really seeing and what i've been seeing for the last few months is an opening from traditional players towards the defy ecosystem right and i think uh something like chicago defilence is probably a good representation of that i see more and more people who want to work with us to get traditional data on the blockchain right so as people are basically opening up because if two years ago you went to them with a use case and telling them we want your data on the public ledger ethereum anyone can use it to create any prediction market or any kind of gambling application or anything like they would probably you know be a bit scared which makes sense um but today i think they're realizing that it's not as scary as they thought right like they they can basically start servicing this world and the first players to do it will be extremely well rewarded right because i do think that what deepa is demonstrating to this kind of traditional world is that we can do things much quicker with much better iteration and basically is kind of the potential is is yours right and i mean you just have to to be acquainted with traditional markets and see how they work exactly and then to start using d5 which is barely eight months like okay a bit longer with maker i would say uh well two years old if we take uh if we take maker's launch uh four years like around i don't remember that but these bags under my eyes were but yeah so i mean it's really hard to see the potential of what's been created in such a short amount of time and where we are today when you're from the traditional world right so i'm really seeing this opening and i'm really seeing more and more people being acquainted and i do think that's extremely beneficial because we don't need this infrastructure from the centralized and the traditional world to get ported on onto d5 at some point and we do need these players to get more and more involved so yeah i think what i've been seeing is is sort of an interesting gradation of risk versus liquidity um so what i mean by that is like the risk profile of crypto super super high um for the majority of people who operate in the crypto space um but then like with products and services like make a dao and um and rv and things like that is bringing in like more traditional um controls around creating assets that have like a lower risk profile to them and at the same time things like continuous function market makers like uni swap bringing more on ledger liquidity this is starting to be attractive to players that are working what's called financial players that are sort of working in the high risk area of traditional finance so if you look at things like people who are trying to finance uh weed growers out in the usa which is is sort of cut off from the everyday financial markets but there has a huge amount of cash on hand that's available to sort of finance borrowing and trade fines and all that kind of stuff and then you also look at like places that have non-deliverable currencies so like mexico or um uh career in some cases that uh like it's difficult to move their currencies between countries and um greg you'll probably have a lot of experience you can share with regards to your your stuff in argentina as well but fundamentally currency controls combined with local economies that are actually quite good and burgeoning combined with like high high risk traditional finance players who are just looking to crypto and going holy crap there's a hell of a lot of liquidity here and there's a lot of demand for yield and if we create products in the right way we can potentially bridge that sort of demand for liquidity in one format into a demand for yield on the other side so i think that that sort of started that's the sort of starting to see um where from from my perspective where traditional players are really looking to try and push into crypto yeah most people don't realize this but dye is actually the most popular cryptocurrency in argentina now it's more popular than bitcoin and that's a good segue into the point i wanted to make which is you can't imagine how little the average person cares about our philosophy they like and i say this as somebody who's probably more ideologically aligned with the average crypto person than anyone else you'll meet no one cares about our ideology they don't care about decentralization they don't care that they care about freedom but in a very loose context not in the specific way that we do they all they care about are the tangible benefits of that decentralization and for argentinians it's that die is a dollar that the government can't control that's what they like so you know i i think we need to as much as we all want to endorse our philosophy and ideology it's great to put that into our products but we have to remember when we talk to the the customers on the other side of the aisle that that's not what they're here for they're here for the benefits of the technology and we have to show them that those are real yeah and i think like one of the coolest thing is that um like basically um interest bearing accounts in terms of like uh tokenized form so so you could hold uh let's say something like a die which is basically a die deposit in in ave and it generates you this interest bearing token which algorithmically now increases as your savings are increasing in the protocol and basically let's say a global permissionless um us dollar nominated savings account and that's that's pretty cool in in places like where the the local economies uh isn't functioning well or uh you kind of have the local currency issues so i i think like uh this kind of innovations we'll see quite a lot and especially like derivatives uh derivatives in in the sense that uh they deviate a bit uh for example uh dye which is a a stable coin a die which is basically uh kind of like an interest bearing savings account and we'll see like more and more this kind of different uh flavors of dye and and that's like one of the coolest thing because you can tell organize this like writes and and and like give a permissionless access because one of the things always has been issued with dfi uh more previously than now is the user experience uh for example before days of unis fob but now you basically can have this kind of like uh interactions just by holding this piece of tokens that give you right to something and and or reflect a position or a product somewhere and that's uh that that's very like game-changing in terms of uh adoption yeah we've seen um uh uh user base in argentina is now i think almost the second biggest staff to the us and that's actually a lot thanks to the maker team in argentina have been hugely supportive but and in terms of like the long term vision of argent that's really what i think excites us a lot about d5 it's basically this kind of us dollar savings account that easily earns interest that's available to anyone with a phone an internet connection um can be really powerful and as you're saying that people don't care about decentralization but they can get those kind of benefits that make a meaningful impact on their life it could be very powerful um but yeah to be honest you know with there's a couple of problems obviously today with gas prices um it just doesn't make sense for some people to move small amounts of their income um and especially you know if they're not earning that much and also they're new to crypto and wanting to test it out that's quite a big barrier so that's something that we're looking to um solve with other people in the kind of months ahead um and also where crypto touches the traditional financial system so there's fear on ramps i mean they're not you know there's basically there's still room for improvement in europe and the us and um it's even harder with the banking system in argentina and mexico so that's something that we're really looking for kind of hopefully the community to help solve in the months and years ahead jack just in the just just as a flag in the interest of time should we move on to the the next topic yep i was about to uh change course there uh so um it uh it wouldn't feel right to have a d5 panel and not talk about uh this yield farming that is seemingly taken over um so to to kick things off with that uh i think like one way i have looked at yield farming and kind of explained it to people that don't necessarily get it is it's you know similar to like a type of referral program where a company's giving away equity to incentivize useful behavior on the network so uh this actually isn't something like a completely new idea companies have done this before uh uh they did it for whoever could get the most referrals and then they end up getting 300 000 referrals and then the winner ends up getting 10 million dollars later be worth you know that much in equity and so it's kind of this unique incentivization mechanism uh that is a lot easier to do in this crypto native land uh where you have more flexibility over the pseudoequity like token um so do you guys think that that analogy holds true um and that this can actually be an effective way to incentivize behavior that is invariably like useful um for the protocol itself what do you want who's got the hottest take well i can just say one thing about basically i i just think like the the liquidity incentives are pretty interesting because uh incentives has always driven uh some sort of like uh utility uh even like in blockchain level but let's say i think the the first kind of way of defy um to some other some certain like kind of like adoption was basically getting yields on your uh stable coins and and and basically that was like the the first thing and now we're seeing basically get get yield and get a bit of like equity so and they definitely have uh some interesting aspects but i i think it's just one part of why you are using products or services uh i kind of think that there's multiple reasons for users to pick pick a protocol and there might be security uh considerations usability so it's of course not the whole picture and of course like the liquidity that comes it comes in all shape of forms and most of it might be very like a liquidity that that leaves away after they they have formed amount of tokens so it's not always like um black and white so i had to think about how to describe this to my dad the other day because he read an article and he's like what's yield farming and i'm like oh boy uh i realized it it's just it's nothing new it's it's user incentives you're just you're paying users to use your product and that's great but it's from that point it's about what you do with that liquidity you know it it's almost like you're throwing a bridge across the river and now you're it's up to you to cross it so but one thing i think is really cool about it is that in the traditional landscape if a company gave an incentive it really only benefits that company in this landscape it benefits the entire ecosystem every time any company does this so when compound launches cob it benefits maker but when i don't know how to pronounce it wi-fi whatever when yearn does a token it benefits comp event if it's earned it benefits maker it benefits everybody so it's showing a the power of these decentralized networks and how they interoperate but b it's giving us a huge opportunity because whether this liquidity is going to stay or not it's there and if we can now piggyback office liquidity to to entice larger participants to get into the ecosystem because they they can now access it at a scale they want to then who cares why it was there it happened yeah i i fundamentally agree with that like from our perspective the way that we look at building radix and and the ecosystem that we want to sort of uh build up around the radix protocol we look at three key things which is access liquidity and choice and like they drive each other access like how easy is it to get my assets into the ecosystem and that's like existing assets like crypto assets but also like assets that currently don't exist in the crypto ecosystem need to be there like we were talking about in the previous topic from the point of view of liquidity like liquidity drives so much of what's important in finance and the more that we're able to drive that on ledger the higher transaction volume you can have the cheaper the costs are but also the more that attracts more people to come and build new new products and services which is is that choice aspect like how many things can i do on ledger with the assets i have there with the liquidity that's there so as you drive that developer adoption you build more and more products and services which in turn drives more people wanting to come in to access the the ecosystem in the first place you get this you get this um self-perpetuating spiral i think if we just look at liquidity and go oh yield farming is like creating these these incentives that is driving not real or like somewhat inflated user growth or somewhat inflated asset growth what it is actually driving though is not just those assets it's attracting new users into the ecosystem but it's also making people who are building the next generation of decentralized finance applications going yeah i really want to get involved this is this is what i want to do and and i have a great idea and i'm going to i'm going to build it on this platform and so while it's sort of this temporary it may be this temporary thing what it is is it's driving real innovation and driving people to really build things that are going to drive that next wave of adoption as well just uh on the adoption element i think from our perspective where we really have such a wide range of users including some who are completely new to crypto have been introduced by others already in the space we like peers and the other people on the panel are really excited by the traction that that area is getting and what it means for the future growth of the space but i think we're also not underestimating the some of the complexities involved even in terms of the language like what is yield farming you know trying to explain this in a mobile app and in our support documents into customers like we would yeah we're just obviously monitoring it closely to see kind of the new projects that emerge how they're explaining themselves what their impact might be on users there's just a lot to unpick there for new users to the space that may see the lure of a higher yield and not quite understand the risks that it comes with um and i think again the benefits of being a kind of open decentralized community is that some of those risks are flagged quite early um but yeah that's just something that we'll obviously have to balance as a kind of as a mainstream wallet in the years ahead is there uh a question about the sustainability of this though because like when it comes down to it all the capital that's flowing back and forth like it doesn't really care about for the most part the you know future success of any individual d5 protocol right like i like to think of it's it's mercenary capital capital it's going to wherever it can make the most money and we kind of see that with uh like bat on compound when right they kind of didn't realize that from the start it incentivized people to deposit some of these like smaller niche uh assets because then they'd have higher interest rates due to like the curve and then people just absolutely flood the market and then the second it changes it leaves um we see the same thing with yearn where they have this short liquidity mining program uh they get 400 million dollars and then it ends and bam back down to like double digits um so like is this actually like helping them or is it is going to be a short stayed um you know there won't last and make some money then get out i mean in my opinion and here i i mean yeah so the oracle part doesn't have much to say with legit farming but i just put my kind of personal uh opinions there i think the great thing happening here with farming is that it's kind of incentivizes it incentivizes innovation right like whenever you're in this kind of very high growth period you do see a lot of innovators come to the space build good ideas and if we're always in a period you know kind of like in after 2017 when so the whole hype and everything started diving down um like these spirits are great to build but i feel like there's a period of very high growth like these ones are great for ideas right i just pop up and then for two three years i get built up you know so i do agree with you that one of the risks is that we could have uh protocols really lose some of the benefits they would have you know like they of course they won't retain all the liquidity and they won't retain all of the users they may have when they're doing some very high kind of uh gross campaign where they get you know maybe one like when users get 1000 api weekly or something like this but i do think still there is a lot of retention that comes and that the base ideas are always born in this kind of very uh very kind of hydro situations right like uh all of the stuff we've been seeing in in d5 for the last few months has really been fueled by this yield farming in my opinion right and it's really been kind of a big catalyst for all the innovation right like uh the economy is getting published yesterday all these year farming combinations we see wifi which launches on a saturday no one is looking for it and then three days later there are 300 million dollars of liquidity on the pool while d5 was barely you know was very any like it was a few maybe 50 60 million uh five seven months ago and you see this crazy innovation where stuff starts rising like uh you know like this to a few hundred millions in a few days i think you know these these aspects of very high growth which are fueled by yield farming can't really be understated right because the innovations we'll see come up right now will be the same ones that will be driving the space in the next two or three years so yeah yeah i think that the key metric is are these you know yield farming programs bringing new assets into the ecosystem and whether you know no matter where those assets reside in any given point in time at that point you're fighting for a piece of a bigger pie and that and that is what i think is important yeah and i think like one one interesting thing that you could actually incentivize i interesting enough having seen some sort of like a incentive that basically uh collateralize your like ghost chain coin here and and and get like uh your c uh uh 20 equivalent and also like incentives on on top and like you could really incentivize all kinds of behavior and as i think greg said well it's it's basically mercenary funds that are moving one place to another and not caring about smart contract risks that much and just trying to get grab a bit of uh yields but that brings like the the other part like um i i think like we uh when the incentives are high um the stakes are high like we we tend to not look that much into the security aspect and then we get like days like the black thursday or the flash loan attacks and then then we don't we again talk about security and then we forget it again when the the sugar rush of the yields incentives come back and i i think there's something like um which uh we should focus a bit more because even the underlying networks are focusing on security uh in essence and why shouldn't the the the protocols and things build on top i am i think there's one thing that sort of is also potentially risky with this which is nothing to do with the the sort of like the the compounding of of risk by sort of like layering of financial instruments which i think is also like something that's interesting to talk about but um there's a potential in the way that this is developing especially on on product on protocols like ethereum where scalability is is an immediate concern that's pushing up gas fees that we're essentially going to be pushing out the the the the person who just wants to come and try it like the ever the the the actual people that we're trying to get to we're at risk of just ending up having a bunch of really big whales moving things around between projects and and and uh and and making a return and then leaving like on the on the on the point you said jack like uh mercenary capital like i think all capitals mercenary just on different timelines um like pension funds work on a 20-year timeline and crypto currently works on a you know one week timeline but ultimately they're all trying to do the same thing which is optimized for return but i think that what like to greg's point in sucking in these assets and getting more people involved in involving more than just sort of the the small internal um uh people who just understand exactly how this stuff works there is there is this risk that's currently occurring with things like ethereum that is meaning that people are looking at it like and going wow i don't want to spend 30 bucks on a on a transaction fee um you know fundamentally something that radix was it has been built to address but i think that it's going to be an ongoing problem for a while for for where the community lives which is ethereum um and i think that that's something that is being caused by yield farming and stuff like that so greg i'm gonna be on the spot here uh so to my knowledge maker is not gonna be doing any liquidity mining anytime soon um but given that it's been such an effective means of uh attracting liquidity while it's lasted do projects that like aren't going to be implementing any liquidity mining like does that put them at a competitive disadvantage uh i don't think so i mean at the end of the day people want the best product and your you know your liquidity mining is going to run out soon so i think this goes back to my original point that i made which is your innovation is decentralization so if you're using liquidity mining as a way to decentralize then yeah that that's probably going to help you but if you're just using it as a way to get short-term capital into the protocol without an end game then no i i think it's it's wrong to look at it from the perspective of like you know getting the capital and the protocol is the success metric the decentralization is a success metric yeah that's a good point and i i think also something you touched on before saying that uh right when comp introduced the liquidity mining then now there's heightened demand for dye right and now like that impacts the the dye market so now they're trying to scale the debt ceiling and introduce new collateral type to meet this demand so it's not it's not isolated to these protocols themselves but um more so impacts like the whole the whole ecosystem so one project's liquidity mining can still help a project that isn't necessarily doing it rising tide floats all boats exactly um so i guess we'll kind of bridge uh these next few topics so moving on from yield farming to risks inherent but i guess yield farming also kind of brings about risks in and of itself uh so is this just layering on like additional blow up risk to the whole system now that uh we right people are just depositing dying compound only to borrow it to relend it to borrow it like all in a cycle to try to juice the returns uh is this you know are we building a house of cards here i mean i would actually say that uh like okay so the risk and production will actually be probably related to euros a bit but for me it's probably oracle risk you know which i would talk about uh first um and it's true that as we've seen this value go up and up and up usually you have a concept of scalable security right which is basically if my system relies on getting the price of an asset right to determine uh whether an asset should be liquidated whether my platform is properly correct your noise and all of this stuff right you don't need to kind of scale your oracle security as you're scaling your the volume you secure right so if you secure 500 million you can't have the same project if you're securing 10 million or 20 million right so to me i think that one of the inherent risks is basically uh whenever we see oracle is kind of being grown in a centralized manner and having extreme kind of power in the platform right and i don't see many examples of this now in d5 which is actually a good uh good thing like i think most that most uh projects are using decentralized records uh today you know which is good and i hope it keeps going this way but one of the risks which i would probably foresee is really an oracle failure right because oracles are really at the core of everything happening in g5 you know like basically uh is the way you kind of see if a platform is properly cut out collateralized is oracles the way you decide on liquidations is also based on oracle's feeding the price of the asset right and i do hope that we keep this approach of using reliable secure decentralized records which can scale as the value that your platform is secure in scales right so having more nodes securing your price feeds etc as as kind of the value you're securing uh keeps growing up right i think that's a really important one because that's one of the concept which is often overlooked in g5 like you do have two things which happen in g-files as a kind of layer tech stack right like it's basically you have the smart contract risk and you have the oracle risk right like those are the two main ones in my opinion uh the smart contract risk mainly throughout it mainly through uh like the platform the underlying platform one is ethereum right so we kind of hope that this one is secure by now but we never know right but after five six years we have very some very strong guarantees right then the smart contract risk the smart contracts which are living on ethereum you have all this geology to have a lot more kind of a lot more people are are doing good it's nowadays like you can see for instance wi-fi you've got og got maybe two three audits after you know uh a week or two of uh of launch right like they got a lot of support from the auditing company so we're already seeing this infrastructure like this kind of community of auditors who can make sure the smart contract is safe or at least give um like you can never have a full insurance right but you can basically check the smart contract make sure that he's decently safe to be to be launched etc you have this also right and the second player which which i think we need to be very careful on is always this oracle layer right and that's the risk we've been concerned of uh chaining and i think that risk is extremely important because through device compiles composability right if one platform was to fail because they are using a centralized oracle and all the platforms are using if these platforms are kind of taking risks from each other right so if you have this composability aspect which you often have in g5 that could be a systemic risk i think to the whole kind of ecosystem right so that's one of the risks which which i do definitely see and it's inherent right like the more value you get uh the more you need to to kind of uh be secure on this on the second layer right and that's why uh you always need to be careful with these oracles and with using reliable price fees so yeah that's that's my take on that on this one i think the composability issues are like a really like a really important flag like i think that a lot of people don't realize that audit companies audit the smart contract but not the interactions the smart contract might have with other smart contracts on ledger like if you look at what happened with bzx and the hack there like you and the reason for that is actually auditing properly auditing all of the possible combinations that can happen is basically a statistical impossibility when you have these kind of very complex operations happening across multiple applications in the ways that they interact with each other um and so what you get is this sort of like complexity problem just inherent to a system that starts to look more more and more like you know what you would get when you're looking at um like interactions of multiple um clouds of things like in chaos theory or whatever but like from the point of view of hey i've got this application here and then this application here and they call each other and this one's using that one as a as a as an oracle but that one's also using that one as that market price as an oracle and you end up getting all of these interactions that you just can't even trace through that can end up creating massive um sort of knock-on effects in the ecosystem and for me that's sort of one of the the big risks that sort of that stand um as sort of unsolvable like i don't i don't see a i don't see a a a a way that we can do that apart from continue to build good controls into the ways that uh smart contracts interact with each other as well as the smart contracts have built themselves i'm sure stanley and greg you guys have much more experience than that yeah i mean it's um it's it's really like difficult because you can't trust like manual audits uh basic it's it's basically a air pairs and and looking into different kinds of combinations of uh attack services and potential uh bugs and so forth but also kind of like you could do mathematical format verification well mathematical verification on on what the code can do and and what kind of uh outputs it has but you you also need to write those properties to to basically see what you're verifying so it's a very very complex work and then you can do fuzzing where you uh you basically are testing in a way that you add different kinds of transactions and you are changing the the the scope of the parameters and and basically seeing like what kind of inputs uh produce different kinds of outputs but it's still very difficult and i i think um uh it will be probably like this for a uh quite a long time and and i think it's a uh it's a reason where uh the risk is has to be borne by some particular entity like either it's it's insurance options or or the the token holders uh and then i think even diversely it it's not an um kind of like uh uh uncommon to understand in a way that maybe you could uh take an insurance for example from from nexus and still you have kind of like a collateral as a last resort by by the token holders and that's uh pretty fine uh because it it also like sharing the risk lowers uh costs uh eventually so but for us it's it's very difficult i mean now uh when we started to develop things we we built it very quickly uh d5 primitives and and and deployed them quite soon after all it's intermittent and now the situation is is basically different because there's so much funds at stake we can't develop that fast anymore and and kind of like we try to innovate but we we try to also kind of understand that uh we have to innovate in a scale uh and at the same time because it's so costly for us to innovate at the same time i think the most important concept when and analyzing risk is that it's not the risk you know about that gets you it's the one you don't see and the only way to truly make it die is you know the entire construct of die is about redundancy you have vaults that are over collateralized beyond that you have the maker token you have governance there's there's several layers between the die holder and the you know end result of a black swan event so you know we have oracle security modules where you could freeze the oracles or we even have a function called emergency shutdown where in absolute worst case scenario you could trigger redemption for die where you could say okay you're holding die come quick claim one dollar of collateral at the previous valid or oracle price so there's like five layers of redundancy abstracting the user away from any kind of risk let alone trying to figure out the individual risk that they might face um yeah those are all really good points uh so something i kind of spend a lot of time thinking about is right like d5 has given us this beautiful level of composability where we can stack all these little money legos on top and create fundamentally new products right like we can provide liquidity to an automatic automated market maker and then use our claim on that lp pool to uh be used as collateral for a loan and like this can greatly increase capital efficiency which is a good thing but we're also creating incredibly convoluted uh products that like are i mean too complex for people that are in the weeds to understand let alone like anyone else and it almost kind of starts feeling like you know back in the like mortgage crisis where we're having studios on cdos on cdos and uh just all this like slice and dicing financial engineering that creates a level of risk that you know can blow up the whole system or just because like fundamentally no one understands it truthfully even though they claim they do um so like are we just gradually making our way to the the system that we're trying to bring down i don't think so i i have i have a strong opinion on the whole concept of the the opacity versus uh understanding debate of 2008 which is you often find people splitting into two camps people that say oh the whole economy collapses nobody could understand these products and then the other camp saying no the economy collapsed because nobody knew it was in the products in the first place and that's the camp i'm in i think that if you have transparency you're doing the best you can do there's people can are capable of understanding complexity the problem in 2008 was that that complexity was sitting behind in brick walls that you couldn't see through you know you could have cdo squared and if everybody could go to ether scan and see all the mortgages inside the cdos we never would have had the financial crisis because if only one person had to go do that they would have done it the issue is that nobody could do that even the banks that were selling the assets didn't know but we were inside of them so i i think it's a transparency issue not a complexity issue i agree on the transparency that basically we see like way better probably than in 2008 because of like uh you don't know the counterpart is uh basically exposure uh of course one thing i'm a bit scared is is uh basically when we're talking as different kinds of assets and we give them some sort of value or or credit trading uh and and that's what's the kind of the same thing that happened in in 2008 when when the uh the mortgages were packaged basically in certain credit ratings and i mean those values were changing and basically uh probably not accurately even valued always and and what's interesting here is that uh we're we have now more transparency because of the like the by default of the ethereum uh transparency and the public ledger and kind of we can avoid that kind of stuff and how to avoid it also one way is is the governance so if you have a governance that basically uh knows what's what's happening and what kind of products there is is is basically sold or or issued that that is like a one way to to help and i i think like um for example if you look at the governance systems that we had for example even even maker system like there's so much discussion on every single parameter and and in general like in in the ethereum uh like so many people are participating and with different backgrounds that diversity is is something that's uh is game changing i think yeah i like just to give a counter to that like i think that we've done very well as an industry since 2017 to uh build cautiously and build sort of like missionaries in in our community and all of that kind of stuff but i think that we're starting to see a real pick up of of people putting money into things without really checking um and i think that's going to increase over the next um sort of three months or so that there is obviously going to be opportunities for people to hide behind complexity even if it's on ledger and i can and i can and i can go and audit it there's still going to be that risk um that people are just like wow that's an amazing return like apr or whatever that's being offered i'm just going to put my money in that i don't understand it i just want that number um and uh so i he i i think i don't like i'm i i i'm with you greg from the point of view of we didn't know what was inside those assets so that's why we bought them um but i think that there was also just a wow like i can get a triple a rated uh financial instrument that could yield eight percent sign me up it fits with my lp agreement and i don't really want to see how the sausage is made like i think that there's similar going to be similar motivated reasoning in this as well so there's definitely some like moral hazard that that can be that could be happening in the device space in the near future for sure yeah but don't we have to outline like what we can even solve like what you just described is basic human grid you can't eliminate greed in humanity yeah absolutely it's it's a question of whether or not that greed will drive a systemic issue right it's like if we can get to the point where the greed is driving a certain type of product to be made which is driving more greed which is then driving a systemic issue that causes a massive blow up that fundamentally means the failure of some of the actual good systems that have been built and i'm i i'm like sort of i'm i'm bullish on that not happening but i think that there is a risk that it could and i think it's really important like and is the responsibility of the community to sort of point out when those things are happening and going like guys this is really really dangerous like we should be careful i think you just described central banking in the 21st century are you saying that printing money isn't a good thing as i don't understand what you're talking about um yeah that's great because i i asked that question kind of hoping to get some diversity of opinion because like i find myself torn on that um because i don't know i i feel like a useful way to think about it is you know going back to the mortgage crisis thinking uh i'm sure you guys have seen like the big short where christian bale uh michael berry's characters uh you know going through those heaps of papers trying to find out yeah how the sausage is made um and then finally being like oh like these individual mortgages like these are going to go in default and then the products built on top of them are going to collapse but with the system we have now uh we can make those heaps of paper available to every single person at any point in time so like you can right i can go on uh like do analytics and see the exact collateralization ratio and um any other derivative metric of these like loan systems to see their general health uh which is something that's really uniquely enabled by this system um to prevent that so i guess it should be a matter of like creating then guard rails to prevent malicious behavior or just at least tame our greed so uh we don't get caught into that path that let us let us astray so to move on to another type of risk i think appears this might be a good good place for you to start but giving your building another another layer one i'm sure you've thought about this a lot but uh since like right now almost all if not you know say the vast majority of d5 is built on ethereum and they're about to go uh a massive uh change in the protocol itself with the c2 upgrade uh do you think that presents a risk just given that everything's built on top and like there is a lot of just operational uncertainty and like how this is going to work yeah for sure i mean like um it's it's gonna this is a huge engineering task that's been going on for a very long time uh ethereum two it's a massively complicated beast it's going it's like it's unfurling in in in like a painfully slow way from the point of view of how fast the d5 industry is moving at the moment like zk roll ups and um so second layer solutions don't really scale some of the important things about d5 like atomic composability between contracts and so like i think that for to stanley's point like when he when when you're building at the start you can iterate really quickly but when there's like a load of value on top of it you've got to move more slowly and ethereum is essentially intrinsically dealing with the billions and billions of dollars the value that is is running in all of these smart contracts that exist on top of these ledgers so it's going to be it's going to be a really interesting time to uh to sort of watch this transition uh from proof of work to proof of mistake from like sort of starting to go into a sharded environment all of the teething problems that's going to fade that all of the teams they're building on top of ethereum are going to face um so uh intrinsically a huge amount of risk to the system which is why it's moving slowly but then that's also presenting risk to the system i think that the advantage that people like radix have is we are able to build a system that doesn't yet have value on it so we're able to move a lot quicker whilst continuing to learn from the ecosystem that currently exists but we don't we're not we don't see ethereum as like the person that we want to beat we see them as the being the the people that we want to be as close to as possible and help take some of that load and help make sure that the ecosystem is able to thrive through these periods because ultimately this is this is a community activity everything like even building another layer one is a community activity that requires and the only reason that we build value is this interoperability and like so if there's ways in which we can help the d5 ecosystem expand whilst ethereum's going through these teething pains amazing but i think that it is a huge lift and i think that a lot of projects are going to be facing problems in this transition period yeah and i i want to say that basically at least that are way like we're very uh we believe that liquidity uh will move and not just liquidity but value and interactions between chains and we're always basically trying to uh figure out like uh what could be the next step for us basically looking and and kind of like expanding and i i think it's um there there needs to be different kinds of uh uh platforms and and and those platforms will have their own liquidity uh networks and and their own applications and we just want to be part of that i mean one of the things i really really like enjoy is the fact that actually like the whole blockchain or like the the the whole ecosystem is kind of like a big big book of history because like every mark we leave this piece of history there you know people who are yield farming uh depositing to other printing uh basically die with each other and and and you know all this stuff and and and basically every oracle call that that basically happens these are like part of the history you can actually go let's say years from now back and look like what what happened uh like in in that era and like we don't see it because we're interacting so closely but at some point it's it could be like a fascinating to get these interactions like as a as some sort of like a story just my two way so one of uh one of the reasons right like this whole e2 um developments being like watched so closely like i think especially in the last like couple weeks um is that ethereum is just becoming very bloated right now all these d5 transactions are uh taking up like a lot of the bandwidth and that's why gas fees are uh rising to incredibly high levels which kind of pricing out the the small guys so uh matthew i think this could be good for you because argent uh you guys cover all gas costs is that a risk that kind of keeps you guys up at night i mean uh are you worried that could become unsustainable so yeah just a kind of important correction there is we now don't cover the gas for much at all because it was costing tens of thousands of dollars a day um so look we we were clear when we launched that we think gas is a pain point for people but not just in terms of the cost just that concept of just adding that barrier of the fee as an extra hurdle if you're trying to tell people this is the future of money but oh as opposed to sending with revolut or monzo or something you've now got all this stuff you've got to calculate the price you've got to get extra assets for it it's a burden so when we were launching and when prices were that much lower we told people we would cover it as much as possible and just abstract it away from them for as long as possible and then it has got to a stage where um you know you can see on f gas station whatever they call it the list of big guzzlers or whatever it is we were spending a lot luckily we're still able to partner with um dapps to subsidise access so avi has very kindly subsidized it for the last month pulled together and maker is still subsidizing it and i think so there's the cost element and i think one important point that we already raised is does it mean that you're only appealing to wales and that's really not the direction we want to take argent or we want to take ethereum so that's why we've been researching layer 2 for ages and already started working on it with various partners but even aside from the cost i think there are things you can do in terms of the user experience to a be more transparent with people about when there's congestion when the fees are high how to make it easy for them to pay in a range of erc 20 tokens and they're just trying to lower those barriers but yeah it's obviously it's a big issue um and we just hope that it gets to a stage where we can go back to again targeting people in argentina and things like this for moving small amounts of money and making ethereum more so accessible like we got about five minutes left before the q a um so i'll end off with kind of like a high level question uh to to everyone here but what is it gonna take for dfi to like really cross the chasm as i say to uh become something that can be used by the everyday person um or uh does that not even have to be the end state for this whole thing to be successful can it be used for just you know the financial plumbing to power our uh derivatives and exchange system that like you know these big financial players can run to run the world financial economy but like you know the average person doesn't really need to know how it works or interface with it two yeah we have real world assets in the blockchain ecosystem especially you know and that's where you know people like chain link really come in to to get that underwriting data onto the blockchain until we have that we can't i don't even think we can call ourselves successful we're basically beta products because you can only go so far financing speculation on crypto assets where is all the yields going to come from in the future if not from genuine borrowers in the legacy economy that's just my point yeah i agree there i would also say that i mean to me the end state is indeed to get as many real-world assets as possible on the blockchain the end goal also is really like we don't want people to understand how it works we just want people to use it and it's very similar to the internet no one understands how i mean not knowing but most people don't see how the internet works right check netflix they check twitter they check gmail all of this stuff right they don't understand the plumbing behind it i think that's our goal as well to me to be honest the way defy succeed is by keep like continuing to do what it's doing right now and if we keep doing like if we keep seeing what we're seeing right now in the traditional world where basically we see you know huge amounts of money printing no transparency whatsoever to where this money goes all of the things in my opinion do really make g5 shine right because next to the incredible kind of opacity which you have right now going on in the traditional world and since the way central banks are acting where you know if there is a distraction oh let's print some money and you know no one will look where it's going uh i think with zifa and kind of with ethereum and all of these super transparent systems this can't happen right so if ethereum just skips and can do the crypto or that in general it just keeps being what it is right now keeps evolving keeps innovating and keeps getting more and more assets on chain and we keep seeing what we're seeing in you know next door then i think we're in the right way to drive this end goal of people using d5 using this traditional system without even understanding it so yeah that makes no sense there it's great i i i think i think that like the more we sort of um go down this the path to uh the early adopters um uh sorry to the late so the early majority bigger not the early adopters the early majority the more we see this sort of like segmentation um of purpose like the the protocol like going to johan's example like the protocol should be invisible to most everyday users in the same way the tcp ip is um the next layer of these sort of like financial products and services that fundamentally allow you to reconstitute assets and to bring liquidity across functions and users are like is the next layer that i also think is going to end up being abstracted away i think it is things like argent that is the interface that these users are going to be going through because they represent this um beautiful experience that can end up being so abstracted from the underlying but have this advantage that wasn't there previously with people like robin hood and merrytrader or these kind of applications because they had to build the stack underneath it like argent doesn't have to do that argent can just focus on i mean not to not to sort of like move away from the engineering lift that you guys are doing all day every day but the that you have this opportunity for a complete competition of products and services for your users whilst creating a beautiful user experience that you can move assets seamlessly through and i think for the point of view of the early majority it's just going to get more and more convenient like it's going to be better and better to hold a wider and wider array of assets in these type of applications because they are interfaces on the back end to these this marketplace of financial services and the assets that exist for the you know being able to be used in those financial services that will continue to grow thanks peter i think we better not mess it up then if our role is uh like that but um for us i think yeah we're really interested in the use case i still don't think that there's that ability to just turn to a friend that's completely out of crypto and in a short sentence explain the value proposition of d5 like getting like you can't really talk to that like fairer more transparent blah blah blah decentralized finance like what is that killer use case the kind of the taxi that can be delivered in a few minutes the easy photo sharing for us i think that there's so much potential in define i think we'll quickly see those use cases emerge and it could be from our perspective at least the kind of um high interest savings account for anyone or a global um venmo for anyone or you know more private transactions and then the other side of it is like login to various centralized apps and things like that so i think yeah until we see those use cases i think will will really struggle with huge mainstream adoption but i have no doubt at the rate that d5 is innovating um and the interest it's getting from great teams that will get to that stage pretty quickly awesome so i guess we can move on to some of the the q a uh looks like we got a lot of great questions from everyone um not sure we'll be able to get to them all but i'll i'll do my best here uh so kind of parsing through them here uh i think this is a really good question but uh what is the panel's thoughts on censorship in dfi uh we've already seen center the company behind usdc uh frees an ethereum wallet for sending and uh transacting usdc uh is this a good or a bad thing um and i would actually also like to kind of add on to that uh like greg especially like is that a risk that you guys um were concerned about like when adding usbc is collateral like given that there is uh the potentiality of right center being compelled to you know freeze the assets in maker because you know maybe they don't like the government as like the systemer so how do you kind of think through those risks yeah this this is the core function of maker holders maker holders are there to sit there you know stone-faced and you tell them the most absurd risk in the world and they say this is the price they they are supposed to be a decentralized risk pricing machine so no risk is in my opinion too dangerous for the maker holders to price it's just a matter of doing so accurately uh when they look at usdc and other centralized assets that do have that you know seizure function that's just another risk they have to consider just like they have to consider the risk of tether imploding and the liquidity dropping out on every crypto market across the board like they that's their job and the important thing is that at the end of the day we end up with a pool of diversified risk not just diversified collateral not just diversified types of collateral diversified risk of collateral you know you can have two centralized stable coins that have completely different risk associated with them so yeah i mean i i think that it's it's almost a good thing that that happened and i i know i sound like uh a bitcoin maximus right now everything's good for bitcoin but um i i think it was a good thing because it it forced our community to acknowledge that there are other kinds of risk and now they're getting into the habit of pricing them where if you price risk accurately then there is no such thing as a risk in general like it i think this goes back to sort of what we started at with with like if we want if we truly want to reshape the financial uh system we have to accept that it has to interact with the real world interacting with the world real world fundamentally comes with playing uh to the rules of that world and how it inter interacts and like some things do need to have centralized control like even shares like sometimes if you've got a merger going on you need to be able to pull back the shares if you've got a majority of shareholders who have said yes to it that you you need those controls for just because the world has worked out through process of legal arbitration and making laws and all this kind of stuff some good practices and ways of working and in in many ways the legal system like can be seen as a decentralized governance tool it's just like at a much bigger scale you have representative democracy that makes rules and then those rules is enforced by courts which you know have like like yes there's lots of problems with it but fundamentally there is a huge amount of value that can benefit in a incredible way from being able to be on these platforms but to be able to do that we have to accept that certain things are functions that have to have to occur into greg's point like it's it gets priced in it gets programmed in and how that needs to interact and it ends up being more nuanced than just the story of decentralized assets and and like your keys of your own and all that kind of stuff like fundamentally the world is more nuanced than that but if we want to be serious about in bringing bringing in these assets we have to accept that certain types of assets come with these requirements associated with them we can't get away from that i mean i would say also that one of the beauties with blockchain and crypto in general is that it's uh kind of an alternative way to do things right like these assets are on the blockchain you're free to use them or you're free not to use them like you can knock in or opt out right and just like greg was saying where they have total freedom to say you know why should the interest rate be if if you're going to use usdc as a collateral how much do you pay for this right like what's the premium to have to factor in all of these risks associated with centralization and stuff right so in my opinion i don't think we should have ever a binary view i think it should always be the freedom of users to choose what they want to use or not which assets they think makes sense for them or not to and the same thing for kind of communities and protocols who are driving the communities who are driving these protocols right they have the right to determine which assets should be part of this protocol or not and if it's part of it then to factor in is a risk ratio of doing so right so i think that's uh it's very important like we should always strive to have as many um assets as possible on chain because it gives more freedom and more options to people ultimately and i think this space is basically built on on options and freedom right like uh do you want this traditional system where you have to accept this currency and you don't control like you know you have to accept the way we mean this currency and all this stuff or do you want to opt into this other alternative system which is fully transparent which is decentralized and all of these options right and the more we can dig into this uh giving options to users and protocol the better we are so yeah yeah and agree like basically it's all about end of the day the community deciding what they basically want the protocol to be what kind of asset that should be and and what kind of tools and and and i i i think that's that's the the thing i mean the more the community decides more value uh it will have like that's like um that's one of the things we noticed that now that we're moving towards more decentralized governance is that we we basically don't want to have a a big say and we want people to tell us like what to develop and other peoples to tell what to develop and and that's like the the beauty of the system and i i think it's it's it's going to be interesting because we'll see like similar products on the market and and and and they just differ in different kinds of uh user-based community and that that's pretty uh nice to see awesome so uh moving on um it's an interesting question i guess one i haven't really thought all that much through but uh so with with growing support for central bank digital currencies uh how do you guys see the dynamics of those affecting uh d5 projects as long as people hold it in argent i don't mind deposit those points are funny but also have an underlying message which is it all depends whether they build an ethereum right or at least a network that can connect to ethereum because that's where all these protocols are currently built and if you're building a new chain and not connecting to ethereum then you're kind of silent so i think that there's a very important point here about interconnectivity between all these networks i mean even in maker a a very rapidly growing portion of the collateral portfolio is in draft bitcoin so you know we need that interconnectivity between networks otherwise it really doesn't do anything for any of us and and and like the central bank digital currency makers feel exactly the same way like you like having spoken to a few of the teams that are sort of building the first systems uh at various stages um the the central central banks actually surprisingly care a lot about things like interoperability i mean maybe not surprisingly when you think about how it's or interrelated the entire financial system is but like you know england's central bank cares about it's if it does a digi central bank digital currency that it fundamentally works with the us system but equally they care about it working with the new innovations that exist on things like public ledgers like ethereum or radix that matters too because what they care about is the money that they create providing utility to the users that they're servicing which is their which is the the the population so they really do care about making sure that this enables their populace to more easily access the things that they care about they're not trying to stand in the way they're trying to go like if this stimulates the economy and gives people more choice and more options and better products then we're for that and so they really care about that interestingly just as a side note they also really care about privacy a lot more than people think they do like central banks when they're thinking about replacing cash especially for smaller transactions that fall below the aml threshold are like we really want this to be private so i think that and with the exception of certain countries of course um the the the there is there is more connection between the ideology of the central bank and the ideology of the of the public ledger in terms of decentralization um anti-fragility interoperation the ability to give users access to financial services and products like that runs really deeply through because fundamentally what they care about is the economy and like all of these things feed into the economy and once in one way or another so i think that yeah central bank digital currency is great thing uh going to enable more programmable money in the system that fundamentally can be used in these decentralized applications and on these protocols the job that we have like as protocol makers as decentralized application makers and as community members is making sure that these things can actually be expressed there as quickly as possible so that we can work out new ways of using them in the economies that we're building do you think they wanted to be private like i actually don't know did they want it to be private truly or do they just want it to be private to everybody but them no truly private truly private so um i can't talk about which particular countries but like large european countries the the the uh the central bank has a view that if we're going to be replacing cash we don't want to remove individual consumer privacy from that in the same way that like we have rules about aml but those rules are gradiated their nuances not just you know aml everything it's about making sure that there's just not there's there's enough uh non-friction to actually transact um but enough friction at the high end to make sure that like egregious levels of money laundering and things like that doesn't occur but it's like it in exactly the same way that you have a balance between uh security and usability right like if you make a system too secure it's not usable and if you make a system to usable sometimes it's not secure like there's a fundamental i think there's a fundamental um uh friction between those two things uh in in defy and in and in in programmable financing like this difficulty between well if we put up all these barriers to getting uh like aml kyc or getting into a platform then people aren't going to use it and we're not going to be able to grow the innovation quickly but if we go the other way then we end up with money laundering and things like that so that there's a balance but central bankers care about that just as much as we do surprisingly yeah i mean um my my two cents on this for what it's worth like at least from the discourse that i've heard like in the us or i'd say almost certainly in like places like china that are starting to seriously consider like i think they're leaning a little bit more towards privacy for everyone but them um and and and with that respect though i think that that can actually be an effective way to kind of like red pill people into what i consider like true digital currencies because like when it comes down to it the only institution that people trust less than banks right like right now we hold our money in banks they know they can see our transactions or whatever we're cool with it and we don't even trust banks but the only person we trust lesson banks is the government so if the federal reserve is um you know complete access to our financial history like people might be like i don't really like that and kind of then red pill themselves into uh bitcoin or you know stable coin like die which could be a boon there yeah definitely with nuance with what i'm saying is there are countries like china which definitely do want an all-seeing eye and there's countries that take a completely different approach like in the same way that many countries in at least in europe because of gdpr laws like companies are going like actually we don't want this user data it's just a big risk to us and like it's a privacy concern because if we get hacked we'd like and if central banks have that data like it's also available to people to come in and maliciously act uh like access it as well and if what if that got leaked like what does that what does that mean for the country's faith in the currency like that's actually a real existential risk as well so i think some countries are taking one person so i'm not taking another but i think it's more than just oh wouldn't it be great if we saw and i had no seeing eye yeah that's a very promising thing to hear as well um so with uh with another question here uh and actually i'm interested to hear you guys thoughts on this because it's something i've been looking and like researching into a lot more but bridging the worlds of bitcoin and ethereum so uh the the question is um can you guys talk about if anyone's like working on like bitcoin or root stock uh or it's like layer twos other than raps bitcoin which uh for those that haven't followed uh is a tokenized version of bitcoin that lives that is costed by bitco and then just offers a one-to-one peg there and it's grown insanely over the last couple months i think you know there's almost like 200 million dollars worth on it around that um so it's come very prominent but uh yeah i would be curious to hear if you guys are you know looking at that or like other layer two forms of bitcoin on ethereum there's a bunch yeah i think the the kind of like uh i i think that this uh bridging is pretty interesting because like i mean if if you get assets to move from one chain to another uh i mean that's that's that's pretty uh that's that's pretty cool stuff i i don't know what if that will be possible of all of the assets like how how those like more older like um kind of like uh change will react in in those but i i think i think moving moving value to network is important and it also allows kind of like a hedging in in one way uh diversification uh i i'm definitely for for for getting bitcoin into uh it and so forth i think there's sort of two approaches that people are largely taking to this like i mean there's more than two but like the ones that i sort of broadly categorize it into is ones that like so polkadot and cosmos um are taking where you sort of have to have both chains like expressly integrate each other to make it work and then there's the sort of approach that ren protocol is taking where it's like well if we can decentralize the custody of the the the um keys that represent the ownership of these assets we can kind of move them between ledgers without they're necessarily being an explicit integration and like wrapped btc is the is is ren's like starting point but they're already decentralizing that i think that's really promising and that's probably more likely where you're going to see interoperability of assets across ledgers because it's just able to move more quickly in theory um than than sort of the per-chain integration across both sort of like both integrations that needs to happen both ways with things like polka dot and cosmos but like obviously we're looking at both like we just want to make sure that everything interoperates and interacts and the value can move as easily as possible between these places because ultimately that's what gives the consumer the most benefit it's not really like they don't care well as we've been talking they just want the access to the products and services that they care about and our job is just to make those roads as easily as easy as possible and there's loads of innovation that's happening that can make that happen yeah and i i think it really just comes down to a matter of like scalability versus trust like do people actually care if it's a more like trustless version of bitcoin on ethereum or do they want it to be you know the most efficient skill like scalable model where i can deposit bitcoin get it back and then uh people can arm that efficiently um where like ren there's a like much higher capital lockup requirement and it's less efficient but like okay i can do this in a trustless manner yeah i would say also really quick that one of the main things here i mean that really goes into the whole narrative of bringing more and more assets onto ethereum right to increase the value and people having the choice or not to use it i think something very interesting which we need to be provided at some point and which we would like to be working on is basically a kind of guarantee which is always maybe some kind of oracle system for instance which could check that the bitcoin which is locked on the bitcoin chain would actually be collateralizing fully something like wbtc or something like rent btc right to make sure that basically there is no kind of under collateralization in such a system right checking that basically for every proxy token which you've issued on ethereum to represent the ownership of this bitcoin it's actually backed by a bitcoin on the native chain which is locked fully right and this i think is something some kind of trust guarantee which will need to be provided at some point which we're hoping to provide yeah uh so yeah i i do think that the more assets you add on chain of course the better and you have so many layers of security you can add on top as you get more and more value right because currently wbtc is 200 million dollars i think uh on uh on ethereum it's starting to be a big amount right so adding this kind of security guarantees where we can basically check the collateralization ratio is super important and will become super critical and here's uh here's an interesting one uh so what are the top three barriers or problems that need to be solved in order to get a d5 mortgage on your home i think i can take that so one is going to be you know what regulatory regime does this asset fit in when it actually enters the protocol because that is a regulated activity and you're going to need to play by the rules uh the second is what do the oracles look like and the third is what does the liquidation process look like how do we get the asset out of the system so really it's three three core features of maker how do we get that the asset into the system but specifically you know what regulations need to apply to it how do we maintain the asset into the system so specifically since you can't just put somebody's name address and mortgage payments on the blockchain what's the compromise in terms of you know using metadata instead of absolute transparency in that oracle and then finally you know in the liquidation process since it's a regulated asset what does it need to go through in order to actually get out of the protocol and back into the proper investors hands that want to hold it johanna have you guys been working on uh getting housing prices on to onto maker so they can uh get houses as collateral you can we can do this easily you know like uh it's something we're definitely interested in and i mean on our side we always work where if we have demands we do it because usually uh the system we have is extremely modular right like we can fetch prices but we can also get uh housing prices we can get weather insurance like weather data you know for for any country so it's really based on demand and it's something we could definitely work on greg i'm happy to discuss after after this code like i think that there is um an extra layer that it needs to be built like um property tokenization of property has been something that people have been trying to do and like raising red like various sums of money some very impressive and some tiny um since 2016 um and like a big part of this is sort of the liquidity problem of those tokens because underlying they're essentially uh like individually they are specific risk assets like i have to like have some good way of working out this particular property's value and risk profile um like securitization was that was the is the solution that the financial markets use for that i think that to get there we need two extra things on top of what greg was talking about one is sort of more liquidity in the system itself like we're not quite at the um repackaging of mortgages stage um because that's a that requires like quite a lot of capital that's willing to take a relatively low yield but let's face it like yield farming looks a lot more attractive than than mortgage uh returns um but that sort of securitization the ability to abstract and create a diversified portfolio of assets and then the liquidity that's required to make sure that can be funded on ledger is really what's going to be necessary to go from the issuance of a mortgage on ledger all the way to it sort of a marketplace that can that can take that uh on the back end so i think there's a few layers still to go so there's another question uh what sub sector and d5 should be taking off so look at the exchanges uh stable coins credit lending insurance derivatives um i think let's uh i'd be curious to point this towards stanley because you kind of touched on uh insurance and like the the need for that and right like decentralized put options where people can like protect themselves against a lot of the risks we mentioned earlier so um care if you have any like further thoughts on that or yeah i think that space is something where where we could put like a good amount of innovation i i think there's interesting projects already doing uh some quite interesting uh options for example the um uh pots finance and potion and and also nexus mutual's in actual insurance but i think like some of the risks that are in the fight they are comparable something that you could use uh credit default swaps and and i i think that's something that uh might be next that you could basically build and there you actually need some sort of like oracle support in terms of like validating uh when when a default arises unless you have some sort of like uh smart contract balance related thing um i i think what we will see also uh is is um kind of like also i would i would want to see some aggregation because um we've seen now that there's like text aggregators like paraswap basically building um kind of like liquidity for for people to consume without slippage i always kind of think like would there be some sort of aggregation of of writing these new financial products for example could you just go into a dashboard and basically uh search where is the most profitable for you to to provide an option uh as there's like multiple options uh primitives coming up and i i think there's like the the the amount of efficiency the the um we have in d5 in terms of when you when you get the value into the system and how you could basically just shuffle it around it's just uh it's it's it's amazing i just hope the the the the gas cost was uh lower but uh i mean that's that's it is what it is now yeah i i agree i'm super bullish on on derivatives um like i think that in terms of um things like perpetual futures and perpetual swaps uh and like what um dydx has been doing uh what like some of these um sort of new protocols that haven't yet been launched um are going to be doing around this it's a there's clearly a demand for it and synthetics is also like as in synthetics the protocol um rather than synthetics as a synthetic acid which is what they create um i think they're sort of leading the way in the way that we can not just um go like take one asset and use it as collateral but how we can essentially take one asset and turn it into another asset and i think that from the point of view of being able to create the things around risk mitigation that are really important it's going to be really it's going to be great but also from the point of view of um like speculation does drive this this industry still i think there's just going to add the next level of speculation um that's that's made possible on top of these ledgers as well so like there's there's and that will drive more people in and it'll drive more assets in and it'll drive more use cases for the for the system um so yeah from our side i think we'd just like to see some um like nexus mutual is interesting i think insurance would be great we get asked about that a lot and as we've brought up many times like having synthetic assets um getting exposure to things like normal stocks and stuff like that could be really interesting just to something that appeals to any kind of mainstream user making it your real financial hub i think could be very cool and i'm sure will come eventually yeah it looks like we're uh we're coming up on time here um it's uh this is awesome this is incredibly insightful uh for myself and i'm sure everyone else uh learned a thing or two here or at least i hope so but um yeah with that thanks uh thanks everyone for joining us and thank you guys for uh giving great great responses here thank you so much for moderation jack thank you for everyone [Music]

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