25° AVC Subcommittee meeting | Stability Scope | Sovereign Finance | Maker DAO

Transcript

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[Music] hey everyone welcome welcome thank you

for being on time we're going to start our 25th ABC sub comedy meeting welcome NS H ABC members Anam Builder Marian ad Clocky bluea Jack our special guests for today as well is here already so much everyone uh today we have stability scope right so personally the the most complex one we're going to start right away but not before mentioning about our schedules so for today and for next week we are going to remain with the same

hour the same time the same schedule uh we are aware that uh today is also Run's call that's why we're going to try to keep it short and also for uh next week's call and next quarter if it's still the same time a runes keeps the same schedule uh we're going to modify it's more likely that we modify the our our meetings for next quarter but for next week it's going to be this same time uh and we are we are pretty aware that probably you're all with ah head with what's going to uh the task for today or the topics for

today is when it comes to Ru call we're pretty aware of that as well uh welcome Kanga hi thank you for been here so let's get into it well as always this is our notion with all the information if you're a new member if you are new to the call maker even if you're not you can find or all recordings uh from our previous calls in here and also our most relevant documents these are the topics that we

have for today although again I'm going to mention about the time um we're going to be here for one hour since then starts Run's call so uh we're going to focus um probably you all are aware about Ron's post it was actually pretty funny because this was from yesterday and we plan this um topic prior to this we been with our guest that is going to explain us more about it in just a few minutes uh but let's get it started so I'm going to give some context into this and then we are I'm going to give some uh

award to Doan which is our guest for today was going to explain our this mechanism that they are building uh but before that just let me give you a brief context of of this so yesterday runs made this post uh that it was related to um putting this yeah let's put some context for so M and died lets uh into a big pool to help people trade and um this platform in in in unisab now it it's mentioned a really big problem about having a lot of

mkr and that in this spool um it's good for UNIS subsistent of course because it makes everything more stable especially during unexpected events in the market now here's the thing the way this pool works now is not the best it doesn't give back a lot of rewards for the risks involved and one main risk is the impermanent lust which um means the value of the money in the pool can change a lot um that's why with this post what run wants is basically to um think of

different ways of or strategies to make the pool more U valuable and and safe for for everyone and it's mentioned like this bullets uh about the capturing uh me the minor structured valum So currently um I mean right now most of the trading in the pool is done by the Bots right trying to make um quick profits so it is mentioned in the post that they pay extra fees to ethereum to be the first to trade um so what is trying to look for a solution to change this by letting them beat for exclusive access

to the pool pool for a specific period of time so this way they pay less in fees to ethereum um now the tricky part is they have to guess how much money they will save in fees uh and that will be a risk for them um then it's mentioned about the uh reh hypothecating the LP assets so this is like allowing others to borrow mkr and die uh from the pool by putting a valuable

um like something valuable for us as collateral so they pay interest making the pool earn more uh however the interest they pay needs to be higher than what the pool usually earns and here is also mentioned about allowing subow or allowing external market makers to to do this to Lo collateral um then it says about the smarter LP fees um in here it mentions that instead of having a fixed fee for old trades um we can make the pool smarter uh so if a lot of people are

let's say they are buying or selling the fees can change to make sure the pool stays balanced uh this would will be helpful or this will help to avoid bad trades that might hurt the pools value um and well these are the kind of like ideas that are mentioning here and then I'm glad to see that there uh more people getting involved one is our guest who also um comment during in the post people from b balun as well that H dmat and ABC Sophie ABC member also tag in the comment and so this uh comes with a great timing

because we had um organize this with our guest from today which is Doan from clave so I'm going to uh introduce you to Doan and if you're here I'm going to give you the word um maybe a a few minutes to introduce yourself and I know that you have a presentation to explain us a little bit more about what it's Su clave and Suave so um yeah I'm going to stop sharing and this will be also the perfect time to put questions in the

comment about it so first of all thank you thank you for joining us thank you for upsetting me uh explaining what is uh what your guys are building and so please introduce yourself yeah thank you thank you for the good words and actually it was so uh great rrop and like introduction for the lvr problem and current Solutions uh and yeah uh who am I I'm danan I'm currently leading the research side of clave which is an account abstraction based wallet on ZK sync and our main focus is on user experience and how to improve the user experience at General uh within improving the security

within improving the understanding of the how inter with blockchains and like account abstraction as you know it's it's so familiar things but uh two weeks ago uh we have also explored the M area with a novel project it it it has done in like only two days and not not only two days like only one day and uh it has done in the E Global taton uh actually it was only for fun but it went so well and uh uh we have seen really good uh recognition from the community and also we have seen like R's comments and some of the UN swap employees also uh

commented so well on that uh I'm still exploring this area and I really want this mechanism to be used in any protocol and I think this is why I'm here to present the maker though to how to utilize the swall or Unis or suay but yeah at the end of the day we are building a wallet uh to make uh the accessing to blockchains easy and secure and also we are exploring different area and this is one of our research that uh I have lead uh so yeah I have a quick presentation but uh I really want to mention only one thing which is this

topic is so like complex even understanding the SW like flashboards uh un4 or like even PBS at General is so hard to understand and even explain so uh I'm sorry if I like Miss some of the uh details but since our uh time is so limited I will quickly do the uh presentation so let me share the screen uh I think right now you can see my screen in here and yeah uh it's called sucl Uh so this is our company's name and this is this comes from so like it's it's like not that so detailed to thing

but anyway Suave is a noble intent based amm designed to increase the capital Effy but what does it means and what problem does it tries to solve so the let's uh explain the problem so in each amm we have traders to give their assets to trade for an amount fee and they willing but we're not you're not sharing this screen we cannot see okay yeah yeah yeah oh okay stream let me try to screen again share again um can you see it right now yeah now it

is okay thank you no problem uh and yeah uh CL is an no intent based am design to increase the capital of so what problem uh is Su clay trying to Sol so in each amm we have traders that are willing to pay fees for trading their assets for an another asset and we have LPS that are putting their money to make uh money this is this is the hall that uh amm is doing but what is the problem imagine that the pull price is that uh like there's one there's two eat

and four usdc and imagine that one eat is equal to the two usdc but there's a price spike happened and one here uh as like 8 usdc in the real world the pool cannot know the real world uh real world's price because all of the blockchains are like a black B and they cannot know what's going outside of the world so uh and then the pool uh pry is being aill to the 8 usdc and then it uh comes back within 2C but what happens at General

when we look at the uh impermanent lose the LPS didn't lose any money in in permanent L and when we look at the Traders Traders are uh Traders can make money within volatility this is the natural uh thing of the trading and they also not losing money but BTS are making money within this volatility because they have bought uh the eats from cheap uh price and they have sold in there but how did they make money they are making money within the opportunity C cost of the LPS because if LPS could uh sell their tokens in here to uh make the pool

pool prices uh with with an equ to this then we really could make more money within the LPS so LPS are losing their opportunity cost and bols are stealing their opportunity cost and they are making money within the uh LP's uh money and this problem is called lvr problem and it has been discussed since like two years uh and we have some of the solutions and what is our solution so in our solution we need LPS to make more money we need Traders to le pay less fee for the protocol and we we need to uh make boths uh gets less Revenue this is

the our end game goal but how we could achieve so yeah this is the this is the like most complex part but I will uh step by step explain the everything so what is SW sve is a chain and in sve chain you can make options and you can prove Pro that you made an auction uh in any chain uh to what happened on SW because in s there's a trust execution environment like it's also another complex thing but you can think this is a machine that works that how you C it the owner of the SW chain notes cannot access the inside of the trust execution

environment so you can trust the auctions or other mechanisms for the soft chain and what it happens in in s chain we are verifying to this curve it's another thing but I I won't bring in here uh like because it's not the topic for today uh but we are checking to if if signature is valid or not and then we are starting to an auction but what is happening on the auction so uh before the auction we need to understand that how uh M boats are making money let's get back to the problem so imagine that there is a cheap

uh eer in here and if any person uh can be the first one that touches the LPS uh not lpce the pool he could it could make money within being the first one that touches the uh pool it's it has known also as the like first uh touching block uh attack anyway so uh the being first one to touch the pool has an opportunity and this opportunity uh makes BS uh more profitable so if we can

make uh the auction in swap chain then we really could make uh we we really could uh give the auction money to the LPS for their opportunity cost so in each auction uh in like in each LPS each blocks we have an auction and this auction is held by the Searchers of the like bots so uh or like any kind of uh person who wants to make M or like make uh other uh profit profitable uh trades and they are giving uh money to

be the first one that touches the LP's uh pool and for and thanks to this mechanism we can uh make money within the auction and this money uh is directly going through the lpce and after the auction winner of the auction uh is getting an opportunity to be first one that touches the lp but we have a problem and this is another complex thing but with the proposal and Builder separation uh any Builder can be the first one that touches to block so in this uh SW web we

cannot verify the uh the transaction that came from uh the Builder if we don't have any kind of hook mechanism So within the Unis V4 we have written a custom hook that uh only accepts the transaction that comes from the SW app of here and how it's being verified is that uh there's attestation given in here and we are verifying on uh L1 or this can be in any chain in the future so at the end of the day we have an isolated pool where users can uh make their normal transactions

and if you are a bought then you need to pay uh more fees to the uh to the LPS and at the end of the day we uh like before that the profit of the MV has been uh splited uh from BS and Builder a percentage of the profit goes to the buildable Builder and a percentage of the profit goes to the bu boats in the past but within our solution LPS are also making money within uh this uh solution and thanks to the uh this

mechanism since LPS will make more money then we can assume that there will be more LPS that are going to take their money inside of the pool and this will cause traders to pay less fees to the protocol and uh we are increasing the profitability of LPS as well as the Traders uh decreasing the Traders fees that they are paying to the uh protocol and yeah I'm really sorry if you don't understand but as I mentioned it's a bit complex problem uh and uh you can directly ask me after the presentation so what is going to be our future

plan so within the like our future plan I want to bring uh our own clay team so we are a nine people and uh six of us are developers me only like three of us are are doing the other things and like we are not that big team to make two separate products and we are all of the focus is on Clay right now but um as a researcher uh is also leading the protocols uh to if they uh want to support this in uh in their uh architecture and yeah uh I'm not sure how like what is going to be the Su

claves feature but uh I wanted to bring the conversation to hear to more discuss about the what is Su and what we are trying to do and what is our end goal so yeah this is the thing that we have done um I can have questions if someone have yes there there are questions in the chat so that's good uh before before going to that please everyone type your comments and questions I just want to know that if I am understanding well

these parts is I'm not technical so basically this is like the main problem it's of course because of um the prices change and everything certain BS certain like smart Bots take advantage make money of course while regular users miss out so this is like the biggest issue you are addressing right with with this uh absolutely yeah Okay cool so basically with this is um kind of like giving regular users more benefits When prices change so Su clave uses like a special

auction system to decide who gets to do things first right uh This Way regular users have a better chance of making money when prices go up or down okay yes just want to absolutely great great H there's a question like in here I want to ahead please yes why yeah why we need to swap chain it is like so obvious that this auction me ISM should be credible natural and shouldn't be uh compromised in any ways sof chain gives us two way that do this but in trustless way look

at C swaps auction mechanisms you trust the co swap server or the auction mechanism which is a so high trust assumption I didn't want to have any trust assumption in our uh Design This is why we used SW s chain SW chain uses trust execution environment to make sure the Integrity of the auction is held by the uh computers not by the any users so no one can uh do any malicious behavior in sve chain so this is the our uh our reason why we H

this so and the second question is that the auction mechanism is completed yeah the auction mechanism is completed in one block transaction yes it's it's it's really depends on the creation but if you uh expect uh to this pool to be like soric and this pool to be like uh a big pool on Unis swap then uh yes but the question is uh what do you mean by blocked uh in one

block in sof chain uh each block uh the time is two seconds so uh you can do everything on SWA chain and after 12 seconds you can post the result of the uh of the each blocks uh to the uh Unis V4 uh pool um no it's it's it's really not that like easy uh yeah um hopefully the first question is like get uh answer from my side uh then I can pass to the second question all

right and the third question is that the Action System that determines who gets first uh access is determined by wealth let me just uh read again okay uh the person who pays most to the LPS gets the First Advantage gets the advantage of being the first that touches the block so your answer is that if if you pay more uh uh money for LPS then uh you are getting an advantage to be the first one that touches the pool

so this uh increases the uh LP's profitability uh hopefully this also answers your question um and the last question is that do we know how swab and E message passing are connected uh there are using uh like two different mechanisms uh first of all they have a trust execution environment uh which also holding the message passing and they also have uh an oracle mechanism that message uh has done correctly uh but um if you uh if you want to dive into a bit more uh you can directly read

the Sol specs it's it's really complex but uh since we didn't develop SW we just developed the application that us Sol I don't think that like I'm the best person to answer this question and there's and another question in here could you provide an estimate how much more profitable it would be to provide liquidity using this system H Express it as a percentage or it's not possible it's not possible because it's it's a game theory that we have developed and uh we need a real life uh usage to see that this is uh in

increasing the lpce profitability uh like this percentage it really depends on the B's behaviors but I really expect a really good uh percentage of the uh improving the LPS uh profitability but this is just an assume not that thing that we have calculated I don't think that it's it's possible to calculate yeah no problem time have you been able to see something uh about the Forum that has been

discussed can you please tell tell us what difference do you see in the solution that you are building uh to what it's proposed by others like such as balancer C swap so as I mentioned C swap mechanisms uh has a really big trust assumption uh you need to trust the co swap entity or uh not uh acting maliciously this is my understanding and I have no idea about how balancer is solving this

problem uh actually so I cannot tell anything about it I don't know if there's any other question about this uh what do you think if would be like to address this main problem here in in in maker uh well according to Rooms pose what should be like the first step that we should focus on yeah um first of all Suave and univ V4 are so are in so early stage but if we are aiming for end goal I think this

solution is the end game for LP's uh lvr problem but when we look at the running production I think we should uh make a really good uh detailed research on what is co swap is offering and what trust assumption do they have and we also should discuss uh other Solutions in this manner uh and I think this should be the next steps for uh runes uh post because everyone will say that our solution is the best but no one will say that uh we have like our

tradeoffs tradeoffs are like blah blah blah uh for like for for us the main tradeoff or like maybe downside of our product is that it's not production ready even Suave is so far away from the main net and even it's same for univ for uh they are two new uh protocols and they need to be worked a bit more uh but for the mechanism and in theory I think this is the best way but uh we really should uh carefully uh write each of the uh approaches tradeoffs and other uh

Solutions actually I have no idea yeah uh there is another question is here uh what are your initial thoughts on the idea of relanding the lp tokens um I have no idea that what is it uh I'm really sorry but uh yeah uh like like for me defi is not the first place that I'm leading to research I'm more on the like user experience side I can't abstraction and cryptography side uh so I'm sorry that I couldn't like answer your questions oh thank you there is one

comment that I would like to address that it's just been posted a few minutes uh well we had a call but but I think that it's very um important I don't know if you have any any any comment on this or anyone in the chat so I'm going to post the link of the comment here um and I am going yeah let me know if you read the comment and if you have any thoughts on this let me take a look at it yes I'm I'm just taking a quick look um to my understanding basically says that

it's not that bit big of an issue as um in R post um mention like it's we shouldn't address that much effort in it because it's not that bit of a big deal de now I'm not an expert on this so I would like uh more people to provide more context or info into this so yeah uh actually uh so he's saying that there's no competition between M Bots uh so this this wouldn't increase the uh LP profess

ability if we even uh give the M uh profit to the LPS he is like saying this uh but uh I I'm really not sure about it I need to take a bit more on the maker and d pool uh and this but this is a like really good um comment um which I have't been looked at yeah no it's okay no problem it has been just posted a few minutes ago and

yeah that part of the is the use worth this yes uh but it's interesting to know more about how this works personally I I'm not a very technical person so I'm like trying to like um understand as much as I can uh but this is good I don't know if there's anything else that you would like to add before we move on to the next topic please go ahead actually no thank you for having me um if you have any like comments or questions you can directly ask me via Twitter uh and yeah uh I just want to bring in here and if you wanna like uh

make any comment on our design you can go to our uh right um flashboards uh blog post we have posted another Post in uh flashboards Forum uh for Suk live and the discussions are being going on uh this flashboards for so if you have any comments or feedbacks I really would so uh I really would be so happy to answer uh this feedbacks and thank you for having me yeah now that you you mentioned that this was actually and I've read it as

well in I somewhere uh this is for a for the E Global um hackathon so how do you come with the with the issue yes um actually I was lucky because as a researcher I'm also uh meeting with a lot of researchers in the industry and one of the researcher of flashbox uh who is Daniel from their team told me the lvr problem which I haven't been aware of before the Heaton and I have spent like 12 hours for this mechanism design and then our uh team members from cave team uh has developed

the proof of concept for uh this design so it was just like for fun for me because I have been already diving into the other specs like uh user experience like rollups like modular infrastructures and many more but uh I really want to dive into the uh MV space for a long time and this was the opportunity for me uh and uh this is what happened on each Global Heaton for like one one a long time yeah that was very interesting since uh this is well we we're going to

discuss if this is actually the main issue or a big issue small issue but it is an issue and the fact that you could come all this in in a day or two it's it's it's incredible so uh maybe we can even improve this so uh it can address specifically the the issue with with maker if there is any issue uh but yeah there is it so thanks again I just posted an article uh for like anyone who wants to understand this is the best uh and simplest article that I have I can found uh so yeah uh this this is my last comment thank you thank you again we're

going to move move on so we have uh few minutes and there are kind of like different uh topics that we have seen in here so there I don't know if there's any a specific Target comments or questions on this because since we don't have that much that much time we'll be like easily to address um maybe we go with our 80s comments or again if there is a specific question or your insights or on this modifications on stability scope as well please go ahead to to share in the

chat so we're going to move on to um to well to BL and clock is comments that it's let me go here okay blue Post in his public document about Alan Peterson's talk on ppgs so it was uh basically what is mentioned here is that what Alan was saying it's was not what we are looking currently that uh the lack of information we are seeing it every

day so how can we address this this issue has been already for a long time and be something about it that it would be really helpful for everyone if we could have the informations uh on time U maybe easily to understand for everyone um to people that could not listen to the talk I am going to share the link in here how can we address this big issue

that it's not only just from monal per se but it's just in general we have seen it so um oh yes here's Shar Marian and I don't know if BL there's anything in particular that you would like to mention in here um but yes this is one of the things as is mentioned um and of course it's going to be like an update of this we haven't seen it yet but uh more info about the PPG was told that it would be included and soon was says we just finished a texting

kiss to the SC proposal oh okay if you can share us the link as well or that will be really helpful okay and then we have uh oh there's some comments oh great thank you so then we have those

comments uh with about these changes right we have this um topic from stability cope that it's enabl B and in status So currently under temporary control by maker core and it's planned to um enable the subow ownership so it's going to be like a trans uh transition plan so the intended transfer to be first allocator out incubator from the incubator now we don't have also much information about this the allocator D so yeah

probably um next quarter but we don't know for sure exactly when are going to have more information um we have seen more uh about the subd Dows actually during for example runes talks on different events even including uh death connect but have not mentioned yet about allocator D um so what is Post in Clocky comments is about the possibility of unfair Advantage for the receiving allocated out compared to others so there is a big concern that it's pointing out Clocky

and uh maybe oh thank you there it is lo links again CL clock if there's anything like a specific question that we could address in here maybe to give some context for um for the audience also they would be helpful and uh question that it's pointed in here is how will the how will they ensure essential unit Capital before um launch so this is regarding the incubating allocator DS that are not currently generating Revenue for

themselves these are challenges for incubating allocator Dows says my understanding is allocator Dow is kind of subow so spark Dow will be an allocator Dow so in here it's still this the uh advantage of of receiving the the power for allocator house this will include uh well so if it's a spark Dow it will be include also sacr Dow and well

subow and the four we have to my understanding there are already four that are named and with their uh Discord or forum and there's going to be six subow if you could maybe extend some more in this Kanga P that also could be a lot helpful with this think we were we're like putting into pieces all the information that we everyone has um into this okay

uh want to Poli because say clucky we under the impression that allocator out token will be the jior capital new new stable tokens earn from fees oh I see people typing in the chat so that is actually good I don't know if anyone else has some comments into this how they will secure essential Jor Capital before launch C say would this not confer an

address Advantage upon the initial allocator out particularly considering that the native bolt engine already holds a disproportionate amount of collateral and that put in eat as part being the first allocator that already possessed ahe a start even with without this than to sparklet well yeah that would if that's the um the analogy would be spark um Kanga says two of the six will be facil yeah facilitator Dows and four Dow

yes okay so spark will be like uh yeah the first allocator out and yes possesses the then a head start well yeah that will be the way to do with this analogy and it the way it is and then we have uh kind currently there is yes still we need more info into this um and well then we have pointed in

here some information relevant to this scope which is about the a revenue share calculation and payment um I'm going to share the the post in here if I'm just going to mention if anyone has any comment on this and also on the modifications on the stability Cod um that has already passed well yes and very briefly I'm going to mention this um about the M2

sp18 about modifying uh the definition of stable assets and cash stable coins but it did not pass um well do do you thought it was uh maybe important re relevant that this definitions would be included into this to my perspective it would have been helpful but maybe not that uh relevant for for most and then about State House Financial that uh released the October real war asset report uh well it did not highlight any major changes or

concerns um although real war users still accounted for 72% of stability fees then blabs published a market condition update for November and they show that borrowing costs in defi have increase by approximately 1% on average and additionally the DI supply has decreased by $300 million dollars Black Tower has submitted a well legal expense bill for Andromeda which has been approved by EST stability facilitators is there anything

any comment into this part uh well Cy comments well fees will accumulate they are unlikely to promptly amass the substantial amount of Jer Capital required for the tire toli collateral oh it's okay D it's okay we're also going to leave pretty soon um how about spark talken can it be used as collateral oh Spark toen yeah well that's that kind of questions I'm pretty sure that certain people can answer to to

this and uh well we are five minutes so well we're going to stop in here uh we have our last call next week about accessibility again it's going to be the same time and if next uh next quarter remains runes call at this time definitely change our our call um if you have any comments into these we're going to very soon we're going to post as well our documents uh from the Q4 so yeah please uh we're going to need feedback into our our

documents prior we uh publish them that's going to be in also in the upcoming weeks and uh that will be all for today thank you so much for the questions and comments and see you next week byebye