MakerDAO – Rune Christensen – DeFi Crypto, Ethereum 2.0, & Synthetic Assets!! (PART II)

we don't want all these centralized
counterparties out there because we're so tired of like chasing you around and
trying to regulate all the time we want the decentralized EU system where we
have that transparency right and we and we know that it's neutral it's not going
to be controlled by some single shady actor right hey stop stealing my trading strategies
if you want to build your own trading strategies predict learn and earn
Bitcoin with zero risk definitely have a look at our community app it's tons of
fun we call this show cryptonites so if DeFi was Superman what would be the defi
Krypton as of today really like problems that you really want to solve like in
the upcoming year or even a few years yeah yeah I mean it's really gonna be a
decade long on many decades really long battle right and it's a true test of
whether crypto is gonna go mainstream or not right and that is integrating with
regulation and integrating with the mainstream financial markets because I
mean dai and maker today is it's right seen a lot of growth right it's it's
great it's really like paving the way for DeFi and there's I mean there's a
whole defi ecosystem there's so many startups there's so many entrepreneurs
there's so many innovators all around the world that's building so many like
just awesome applications right but if you kind of like to zoom out and look at
it from a broader perspective it's still such a tiny tiny ecosystem right I mean
it's a tiny mind right like even now like Dai the transition to multi-level
Dai entually being you know fully successful and we've almost reached the
mark where there's a there's a hundred million 100 million multilateral dying
circulation I mean that is actually nothing if you compare that to let's say
a commercial bank right it's it's not really the basis for any sort of like
real financial system right or you can't you can't Bank that on bank with a
hundred million dollars right you need a lot more you need billions and to get to
that level of scale without you know just inflating at bubble in ethereum
you know or doing something similar to the financial crisis wherever you put
all the eggs in one basket and just count it on the real estate market to
take care of everything right what we instead need to to create a system that
is scalable but all so you know secure and and resilient and
can last into the future we need diversification of the assets in the
system right so we need to go beyond just ethereum we need to go beyond just
crypto even right we need to go into real-world assets and real-world assets
I mean that is the frontier of defi and a really blockchain in general that is
yeah I mean it's going to be the biggest challenge yet right because that's when
we have to take all of our ideals right all of like our you know our fundamental
goals such as you know unbiased unstoppable stable coin for everyone
right and we have to actually go out and we have to explain to the regulators why
the benefits of decentralization outweigh the you know what they perceive
as issues such as it's it's suddenly they can't control it all the way they
normally do with the banks right and yet we still want them to support us right
because they need to they need to help with the like the the assets and the
like the liquidity that can allow something like Dai to scale to many
billions right we need you know we need real estate we need trade finance we
need commodities we need you know stocks and and just all these regular markets
and if we can get those tokenized right so we can do things like security
trophies or asset-backed ovens we can get them onto the blockchain and and
start utilizing them in first of all in maker way it's really such it's the most
critical piece of maker and maker just truly needs diversification for it to it
really makes sense of scale right and then from there as it's in maker and we
started done the ice-breaking and we actually started creating this ecosystem
there's the liquidity of security token and tokenize real world essence then it
can also start powering and many you know all of the financial innovation and
the defogger system right there'll be they'll have both a very stable dai and
that's backed by diversified assets but they'll also have the ability to do
things like you know automated market making for I don't know like commodity
futures or something right you know insurance on you know the
custody of gold or something like that right and once we get to that stage
which again it's it's I mean we've obviously a maker we've been we've
understood that the challenge of regulation is like the the biggest
priority of all right for in the like in the future now that the technology is
here so we've always already been working on this for several years and
we've had a lot of success but it's also only become apparent to us just how much
we have to continue with this approach right and how the entire industry and
the ecosystem has to come together and really you know present this unified
front of blockchain is a good thing right it's going to actually benefit
everyone it's going to benefit the regular people it's gonna benefit the
unbanked that disenfranchised it even has benefits for the regulator's
because for many regulators their main concern is actually the exact same
concern as those of us from encrypts our right which is the you know the thread
of shady centralized actors right that's it behind the scenes and suddenly turns
out you couldn't trust them as much as you like the fact that and also
something like the radical transparency of blockchain it's actually sometimes
when when I go and I explain that to let's say and like like financial or
like securities regulators right and they they understand that this means I
can do a real-time audit I mean I've heard some actually some bankers posit
that it's actually not going to be it's not going to be the banks it's not gonna
be the financial system that's going to like truly like drive decentralization
of Finance at scale it's going to be the regulator's themselves because they'll
be like you know we don't want all these centralized counterparties out there
because we're so tired of like chasing you around and trying to regulate all
the time we want a decentralized EU system where you know we have that
transparency right and we and we know that it's neutral it's not going to be
controlled by some single shady actor right and and when there are these
centralized points of failure which does always have to exist in the end right
when it comes to things like custody of commodities right or something
and when that's the case the radical transparency just makes it so much
easier to keep track of them right which actually also like ties back to how
maker can can approach this right because a lot of people they do get very
you know I would even say scared right of this idea that well dies right now is
this pure acid right it's backed by ease it's decentralized you know there's no
governments that can seize it and so on right so once they start realizing that
okay if we want to go to a hundred billion we can rely on Eth loan anymore
so that means that means centralized assets that means centralization that
means now the government's gonna take control right but the answer is that the
we can use the fundamental principle of decentralization even if this new
paradigm of tokenizer global assets in the form of diversification right so you
don't want to put all yeah I mean you never want to put all your eggs in one
basket right so you never want to rely on just you know one custodian or even
one legal system course yeah you want to have real estate from every continent
right you want to have trade finance assets from you know as many different
jurisdictions that have strong rule of law as possible in the whole world right
you want to we want to get Maker to a point where you could have let's say
even the United States of America totally cracking down on them saying
like we're gonna abandon everything we gonna seize it all we're gonna ban it
you know and if they like I mean that the ecosystem needs to be diversified
enough and resilient enough that even if that happens it'll keep going on it'll I
mean it'll be a big loss right but that's what NPR is for right that's
that's one of the fundamental dynamics of the system is that it needs to be
able to absorb these kind of events and keep going and continue to provide
stability to the people that needed in Argentina and you know Venezuela and so
on right and yeah I mean the path to that point is it's gonna be a lot of
getting your letter work yeah and and ultimately of course we don't ever want
to see America cracking down on crypto right and I don't think it's gonna
happen because with the right approach it's just not
going to happen right well if you do education first and sort of like step by
step abduction everyone realizes the benefits right and it really can be done
in a way where it just is gonna be better for everyone and in terms of so
you were talking about the Kryptonite itself so is that scalability of the
blockchain one of the main problems that we need to in order because right now
you said it talked about 100 million dollars worth of die on this side so
scalability was the main concern that you you you would like to see being
progress result is is that is that one of the main things that yeah so the I
get asked this question a lot right yeah and apparently that's one of like the
top you know it's one of the top questions that we get in maker alongside
you know are you gonna move to X yeah Bitcoin what are you going to make
winners and we actually have a completely different perspective on this
than most so we don't really see scalability as like a real risk at all
and that's because we I mean we're just focusing a lot on cross chain
interoperability right so we really do see a future where there's going to be
many different block chains they're going to have many different trade-offs
right yeah some of them will be extremely centralized some of them will
even be very regulated and what's important for us as a decentralized
project right is that we're able to be available on all of them and yeah
sometimes call this concept blockchain transcendence right because the idea is
really that it's actually possible to build a decentralized application like
maker in such a way that it doesn't really exist on just one blockchain but
that it really like is it's like and you know it's sort of virtually exists on
all of them but it's a single system and ultimately there does need to be this
concept of kinda like what I think of as the anchor blockchain so kind of like
the call where you you know which is the place where you have things like
governance and and Emergency Response and like security
logic and that's where I think this of the you know they theorem 1.00 chain
that it is a perfect launching planet for that what you need is certainty
right and resilience and that's what ethereum really brings to the table
more than any other you know like smart contracts platform and so from the
ethereum core we then see a future where we will be
branching out to all these different chains right and we already have many
examples right so we already got the X tie I don't know if you're aware of that
but that's ok so X tie is it's I believe it's the first side chain to theorem
it's like it's a very small very high performance but also quite centralized
side chain that has died as a native currency and it allows users to like
quickly move back and forth between the X star chain and the main ethereum chain
so essentially if you want to do micro transactions you can just migrate you
can move your die quickly to the extra chain do a ton of transactions and then
move them back to the ethereum chain for like long-term safekeeping and X ty has
actually been it's been tremendously useful in and some like very specific
cases especially things like community currencies and like event specific
currencies where you can get this like you know I for instance that some of the
the like eath Denver is an example where like then there's this each Denver coin
that's running on the X tied chain and can be used to like purchase all sorts
of stuff and it's it's incredibly cheap right and then when all is said and done
you can move on the bulk of your if you just want to do long term rolling it's
so easy to move it back to ethereum blotchy and there's we have another
example of a cross chain link with the EOS watching for some Korean gaming
applications so they used AI as kinda like them you know as a native store
value but they run all their all that blockchain logic on us and so they've
built a bridge that allows them to also easily swap between you know like like
excess liquidity that exists on the theory blockchain but then do all like
there to the user interactions on the US blood
to and both of these examples are right now still centralized examples of cross
chain infrastructure but what's coming next is actually decentralized bridges R
and D centralized blockchain interconnection and we're tracking
something like I think seven projects right now that we can see like this like
very legit crushing projects so ultimately it's again this element you
know this this element of diversification that just means that
there's going to be so many different ways to interoperate that you never have
to worry about you know if the fees are too high where you're doing your
transactions right now it'll be so easy for you to move to a different platform
right and and that also means you don't have to like commit to a single
infrastructure you can actually wait and see what becomes popular and you can
even easily adapt over time right and finally this approach is also what is
needed for Eth 2.0 whenever that comes around right because it's actually
the exact same idea it's just you just take a theorem and you split it up into
many many more block chains right and so it's really no different than just like
they the sort of the existing multi blockchain universe right and on top of
that you know the and this is kind of like the standard answer that you get
rise like you know there's things you know there's all this new technology
ceará knowledge proves optimistic rollouts all of this stuff that's also
coming and I think with all of these developments combined from our
perspective we we actually don't really spend too much time thinking about
scalability we like we see it happening way in advance of what we need so yeah I
think in my opinion that's essentially a solve problem and the real issue is not
scalability of you know transaction bandwidth is scalability of what I would
call like economic bandwidth right like the of the ability to have a large
financial ecosystem that is still able to maintain stability because it can
rest on actually valuable assets right because that's where we need to you know
because the demand is always growing right so that does
mean that we do have to move fast in terms of getting the you know the real
estate in there getting the gold to the commodities their stocks the things like
trade finance you know lines of credit to small businesses all of this like
again like the stuff that not only will empower the Defi movement right and
power the trips our company with yeah with actual diversify stability that
isn't correlated to crypto itself but also you know benefit the other way
around right by taking liquidity and taking capital from the the crypto
markets right and the the the in all the defi use cases and funnel that out into
the real economy in the places where it's actually really useful right and
where it really makes sense because it's to the you know the assets that that
actually matter right I think potentially in a way that's going to be
a lot more just you know more efficient and more transparent and I would I would
think potentially just with better risk management than the than the current
system that is so interesting because that definition of scalability as in not
worry too much about transaction per second but worry more about the
stability of the network being able to hold all these assets to create in an
economic or a new financial system that's a really interesting way of
looking at scalability yeah I mean from a perspective that's certainly a really
big challenge and then there's also one other aspect that we think really needs
you know that that I guess a trend we're seeing in the wider ecosystem and it's
also a trend that we believe it's critical for maker to be a part of right
and that's their roll out of no synthetic essence
yeah and just generally more options when it comes to stable homes right so
right now we have Dai that's back to the US dollar and you know that's great
if you're an American it's great if you're from South America where they
really love you know they really like the US dollar they're very familiar with
it it's actually not so great if you're European for instance because you don't
really you know you don't really deal with the US dollar in Europe so much
right you've got the Euro right so it's gonna be it would be impossible to
convince a regular European business to stop you know doing
their payroll with Dai or you know do something like Tribble into accounting
or something where the internal Treasuries is running with Dai if that
means now they have to take on the the Forex risk of the US dollar because they
don't want that they use euro right that's what's stable to them so
we of course also need a euro Dai right and we need just you know to meet the
demand of every other currency as well right because fundamentally the
challenge of getting blockchain adopt in the real world is to reduce the friction
of doing it right it's we want people to adopt blockchain
without knowing that they're dumping it right absolutely
I mean no one went out there and tried to get people to adopt you know IP or
something yeah you know and you also don't have up electricity right your mm
yeah and and blockchain is the electricity right so in order to build
these applications on top of blockchain that actually makes sense to regular
people do the systems on the blockchain including including die right needs to
provide these fundamental services and these like fundamental infrastructure
that people expect and at the very minimum of what they've already got very
interesting II talked about synthetic assets that's also a topic that's quite
hot these days do you mind telling us what it is and and are is it just a hype
or is it something that you believe has real value to it you know am i cheering
yeah I think I mean it I mean so from from a perspective of maker there's
there's essentially like there's two aspects of synthetic asses right so the
first perspective is that if you look at the eye that's already a synthetic asset
right so this guy is just a new synthetic US dollar yeah and and the
immediate near-term next step is to just add more currencies right so euro
British pounds yen remin be you know and and so on and so on right because it's
it's actually incredibly easy and cheap to deploy like she just like deploy more
versions of the same system right but it doesn't stop there you can take
it a step further and you can start doing
yeah what's I mean what's more commonly what what's not in there in the in the
broader sense and more commonly is referred to as synthetic assets which is
to take you know take existing speculative assets and create synthetic
versions of them right so that would be things like synthetic gold synthetic
stocks right synthetic commodities but even things like you know a synthetic
stock index or I don't you know a synthetic token that tracks the GDP of
Nigeria you know you can do all these like advanced assets that ultimately I
just represented as a token right so it's extremely easy to access and
understand if you already are using digital assets right but it can provide
you I mean it can actually provide some really amazing real world use right I
mean first of all there's just you could just imagine something like
decentralized trading platform right so it's like it's like what we you know
it's like a decentralized exchange today but instead instead of just you know
only being able to buy and sell Bitcoin or something like that you can actually
find sell anything and the assets that you're buying and selling
our essence that ultimately had this very like it's you know real backing
beneath them right so you actually not just buying a synthetic asset and it's
some paper thing where you don't know if it's you know the value is really there
it's backed by the entire maker ecosystem right so it really is a stable
less like the tie itself so it's both great for kind of like short-term
speculation and trading on a trading platform but you can also use it about
like long term holding right which again means that then you can finally provide
some real value to the unbanked right finally they have access to this you
know to what currently is only available to essentially privileged people in the
West right finally that entire suite of like financial products and services can
be made available to everyone and my really favorite example of how this
can really play out in the real world and be something that that like you know
truly like drives real value for real people and not just and isn't just you
know speculation and trading and all this stuff right which you know I mean
many people are still see spoon-fed against this just being like yet another
you know round of financial engineering right and what's the what's the real
value right like how does it actually create something tangible and that's
where I think you can go back to the the origin of derivatives right like why
were they even invented in the first place and that was you know crub yield
futures right which was essential to for instance driving the the agricultural
expansion in the u.s.

Right that was really able to like create a whole new
level of financial stability for farmers right so they could they were able to
expand their operations and not constantly worrying about you know the
weather and yeah and just like the market right yeah yeah yeah I think it's
made you know in the context of climate change that just gets even more obvious
how much this is needed right because unfortunately most of the people in the
world most of the farmers in the world they still do not have access to this at
all right they are actually completely in a place where if they're lucky with
the weather that's a big problem maybe they won't be able to eat yeah so farm
and really it can go yeah yeah so imagine if they can simply use a
synthetic acid that it's just like it's it's essentially hedging their exposure
to their crops right so it's like it's like it can sort of like you can think
of it as like this shorting their own their own crop essentially and what that
means is that if if you know there's too much rain or whatever you know the
weather ends up being really bad and they're they're you know the heels from
their farming ends up being really bad then the synthetic acid will then give
them a great yield right and that way they they hatch the exposure just like
the original derivatives from many hundred years ago and that to me would
be like I mean it's gonna take a long time but that to me would be like just
one of you know one of the ways we can really like prove that what we're doing
has been successful in you know providing real value to the
real world even when it comes to the very complicated like they're very
advanced financial engineering right because that's again that's what it's
all about like in the end this none of this is for like you know speculation or
whatever right like that that's not really what most people are in to
bludgeon for and really what it's about I mean just isn't right what it's about
is providing real value for real people especially the people that right now
just so desperately needed because they're they're being you know they're
being biased against by the current system it just doesn't work for them and
we have the power to build a new system that actually does right and actually
treats them equally and the value unlocked from equal treatment of
everyone in the world by the financial system is going to be staggering I mean
it's it's the it's the greatest example of just like totally untapped potential
right the fact that there's for instance 1.7 billion people that don't even have
basic banking services available to them right I mean they're totally siloed off
right like the network effects that will occur once we bring all of these people
online so to speak well I mean it'll it'll eclipse anything else that's
happening right now I think it's amazing was you covered almost every single
aspect of Defi in one interview I'm so happy you're like derivatives
decentralize exchanges, stable coins synthetic assets talking about lending
you talked about passive income/ earning interest now one thing that I really
want to ask you before we end is in terms of passive income a lot of people
are saying that the entire financial system was built based on loans like
banks offering simple loans and being able to put your money into a bank
account a savings account and get interests and just by you know having
your assets you know locked up somewhere and a lot of people say that it's really
weird because that's how it started but you know kind of lending and this whole
passive income is coming a bit later here in in this space but is that the
ultimate way to really get the attention of the mass before using derivatives or
decentralize exchanges or or lending and all that is that simple earn interest on
your assets something that really excites you
yeah absolutely I mean that is the core right it is it is bringing the power of
of defi and maker and sort of the funneling of capital to real-world
assets right and I think actually if you look at the the history of like the
short history of a blockchain it has played out very similar to the kind of
the traditional financial system right because you have Bitcoin as sort of the
original analog to gold right and then you have defy it's kind of like that's
when it started transitioning into banking and more more financial
engineering and and then finally like the last step is then then you begin the
real financial engineering of synthetic gases and all that's fantastic you
shared so many gems today like Rune I've learned so much and I think there's no
better person on this planet it's my bias to talk about defi and and
the future defy and for me now it makes a lot of sense you know why this is
important I already knew kind of why was it important but now I can see more of a
mid to long term picture of where we're supposed to go so I really appreciate
all the great information if we want to follow you get in touch with you what
are the best tools or what kind of social media is good to get in touch
with you or the Makerdao foundation well I mean we're on Twitter
right so we got that's a twitter / makerdao and I'm also on Twitter I don't
use it that much but I'm I'm Rune @RuneKek on Twitter and then you I mean one of
the places where people go if they really want to participate more deeply
in maker and be a part of like you know really like shaping the future of defi
because MakerDAO it's called the point is to have I mean a decentralized platform
but crucially also decentralized governance of that platform right so
we've spent a lot of energy on building this urban ecosystem where it actually
is everyone is a part of building it right and everyone participates and so
for that we have the forum so that's forum at makerdao dot com yeah and we've also got a chat room that's a little bit more for
kind of like casual free-flowing conversation right
so that's chat dot makerdao dot com make it that will come and currently I mean we still have
the foundation right so so that's what I work for and the foundation is it's
similar the maker foundation is similar to something like the theory foundation
in the sense that it's kind of like it's building the basics of the system right
we launch multi-level tie and now our next step is to really roll out the
decentralized governance and then eventually the goal is really that the
foundation will disappear entirely from the picture because the community will
ultimately have all the tools that's necessary and all the education and
knowledge necessary to run the entire system itself and it simply will not
there will be no use for a foundation at that point it'll the protocol and the
community will have everything it needs to be a you know a true down write a
truly autonomous organization that's fantastic that that would be a complete
like paradigm shift right having complete decentralized and not needing a
foundation anymore or it just works by itself like this self-sufficient market
that's really incredible I really hope we get there soon I mean the DAO is
something that we also really preach a lot and explain that it might actually
be more important in Bitcoin at times because rather than creating just a bank
account or a store of value it's creating an entire economy or ecosystem
that can really benefit everybody so I really hope you guys get there very soon
again if you come to London want to come back on Cryptonites yeah literally
you're our guest any any time thank you so much Rune for coming on and guys for
those watching out there don't forget to Like subscribe and comment here below I
try to get back to you an answer as soon as possible
we're here with EA partners and we have the wonderful Rune Christensen we look
forward to seeing you again next week premiering at 8 o'clock GMT at a PC near
you thanks for watching guys

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