40° AVC Subcommittee Meeting | Stability Scope Bounded Mutable Alignment Artifact | Maker

Transcript

[Music] okay let's start right away thank you thank you everyone in I see your name Clocky Rocky hey CL Rocky Blue Pipkin Anon Builder Marian thank you everyone for joining us something that I always forget to mention to the guest and to everyone is that this call has been recorded is that this has been uh live stream u YouTube and Twitter so yeah there's more audience that we think and uh we have a very special guest we have Paul from Moro who is going to be joining us and I'm going to start right away since

I don't think one hour is going to be enough for us to discuss all the topics um relevant for the scope relevant for maker Rel for Relevant for crypto Twitter in general for crypto in general and so yes let's start right away thank you for your punity poll thank you for observing the invitation so I'm going to give you a couple of minutes to introduce yourself to the people who don't know you yeah sure um thank you very much for having me so UL I'm co-founder and CEO of morphal laabs company that uh was created two and a half years ago uh when I was at University in Paris I was doing like disted systems and consensus

agorism and uh got interested into Defi and more specifically defi lending and so I I started um looking into a and compound and very quickly realized that you know you had a large interest rate spread between the landing rate and the barring rate and so the first protocol I built uh with my team was called uh Morpho Optimizer and it's a matching engine built on top of aen compound and it's uh essentially optimizing the interest rates of Aven compound was uh providing the same liquidity and the same risk guarantees and so we started with this um two and a half years ago two years ago I think in we started in

2022 uh we grew this from zero to two billion um dollars and so essentially as a product it's like you can think of it as a landing and borrowing exactly like a or exactly like compound but with better interest rates uh and same like Risk parameters and same liquidity guarant is it's a very singular different protocol there's nothing quite like it um but very quickly we realized that it had some limits uh and the most important one being it's built on top of aen compound and uh we can't you know grow bigger than than have in compound with this model uh and most importantly we have to depend on their model which is you know uh upgradable so it sort of like changes

sometimes uh has a bunch of risk parameters uh uh and so you have to monitor all this uh so it's very hard actually to build like a large scale D5 protocol on top of defi Ling protocols and so this inspired us into building something where essentially other defi protocols can build with confidence um and this is how we came with the idea of Mor for blue which I'm sure we'll have the chance to discuss so I sto here for the intro uh just that we deployed this new completely Independent Learning and drawing protocol three months ago go and it has like 1.2 billion I think of the bu it right now yeah we're definitely gonna talk

about all these Hot Topics um we have a lot of questions I want to say I want to shout out to jmat and to paper Imperium we're gonna ask their questions H but please anyone is very welcome to ask questions Insight comments on the chat but let's start start um first I want to talk about Innovation so uh there are like the following points uh it could be whether you're working on any of them or you have like a idea so we'd love to have your point of view or insights on this and um okay so the first one is like it kind of seems like it has already been

resolved or at least made a lot of progress so uh on the problem we saw from from the beginning it's that first it was like isolated Landing versus fragmented liquidity so morphon is one of the main players in taking this forward so can you tell us more about it like specifically if you see Innovation beyond that has been already implemented yep uh prer so I think first thing first funny thing to say about isolated lending is that when I first saw the first mechanisms around like isolated Ling I was very bearish I I thought it was super dumb because like liquidity is so important and if every time you have a different risk profile you have to fragment

liquidity uh then it's weird uh you sort of like you know complexifies the user experience a lot uh and the efficiency a lot and then I you know thought about it uh obviously a lot over the last two years and very quickly we we realize that when when designing more for essentially what we the exercise we try to do is like what is unnecessary and what can be rebuilt on top of Morpho blue and turns out liquidity fragmentation is more of a illusion than a reality if you have sufficiently complex players let me explain that on

Morpho blue we have isolated lending pools so as a lender uh liquidity is fragmented compared to another pool however uh we have a second protocol called metamorph for which is a you can think of it as a uh a vault which has a risk manager and that is going to allocate liquidity to relevant like partes to to relevant pools sorry um and the interesting thing with metamor is that it reaggregates liquidity for lenders so as a lender I have like the liquidity I have available for me is equal to the sum of all the liquidity of the markets that the metamorph Vols are supplying into and this way get the exact same liquidity as what you get on

a monolithic pool like a and where it gets interesting is when you have multiple uh aggregators plugging into the same uh morphol Blue Pools so let me take you an example uh we have the gaunlet volt uh that is depositing into uh usdc into the wsd market and to uh the wbtc market right and you have the uh stous volt that is deploying in one of those two markets and into real world asset vaults turns out that gaunlet and Steakhouse have different vaults with different risk but they do share some risk they do share some collateral in common well they will share liquidity to the extent that they share risk so it's

as if compound and a you know they have those all those different collateral assets but they have a lot in common right and so it's as if they were able to share liquidity to the extent that they share risk so that's the unique you know aspect about liquidity uh in in this isolated design plus metamorph of volts um first level of understanding just to recap this is like you have three ways of three levels of understanding of isolated liquidity first level is oh it's isolated so it's fragmented it's bad second level is oh with an aggregator you can do as well as a or compound third level of understanding oh as soon as you have multiple aggregators like multiple volts built on top that share some markets well you will share liquidity and

amplify liquidity Beyond what's ever you know possible on compound or a that's for lenders we have the symmetric for bars I can go through this as well if you want uh but uh yeah I know we have a lot of questions so I hope that was clear enough by the way it's not the easiest topic yeah I love that you're really kind of like making really examples so we can all understand this uh without the necessary to become like experts or to know a lot about the the the topic and you have mentioned um uh well Morpho blue and metamorpho I think you explain pretty well but like in very briefly in like simple terms what is like the the biggest difference

between them right so you can think of Morpho blue plus metamorpho as a but unbundled into two pieces so Morpho BL is just the core lending engine so you can think of it as unisoft but for Lending so it's just one pool is one collateral asset One loan asset one liquidation loan to value and one Oracle and that's immutable forever and that's what like the the what one what one Mor for blue pool is is about essentially and obviously you know the big difference with a there is that uh as a

lender on a you deposit your liquidity you don't have to think right you they're going to manage everything for you and uh they'll do the risk management they'll upgrade the protocol Etc on Mor for blue well if you have some die uh you you know you want to earn some yield on it you have to select which pool is the one that is relevant for you so it means you have to do your own risk management essentially you have to uh decide if you want to get exposed to wbtc to WS Etc so essentially do the same work that the Risk Managers of a are doing uh on but you know as as a lender and obviously that's you know that's annoying and so this is why we have the second protocol that is built on top of morphol blue

which is called metam morphal where essentially it has a risk curator where you deposit your die passively like you would on on a or compound and then risk manager say gaunlet for example is able to you know select which pool they're going to deposit liquidity into was very explain thank you so much and I think that the next question it's uh probably yeah it's has to be one of the first one since it's um how the maker end up using Moro in the first place like the Walts were spoon up prior to asking governance permission or approval so who initiated this process who initiated this process and what was

their thinking marful Sim to know about this partnership before maker did this is from paper right so the the the great thing about uh morosa is fully permissionless and immutable so again you know think of as for PS so we don't get to to be like involved in uh you know all the different processes I saw that I think fra uh deployed like similar PS as as maker or whatsoever I I did not even know they they had deployed like that those PS Etc and so in the case of um of maker uh I don't know exactly would deploy that so I I've been chatting with like the block analytica

team uh the spark team and uh at the time like USD and ssde was like super uh interesting uh they started like asking me questions about like morol BL how did it work and how it can be leveraged to to essentially capture this opportunity in a way that sparland uh was not able to and so we sort of like explained them like you know the different mechanisms and then I guess they I I don't know frankly would deploy the pool uh and uh but yeah so that's the order of things it actually went quite fast to be frank like between the moments where um you know we I guess they realized that there was an opportunity for that and the the moment it was set up uh so did that

answer the question actually I forgot what the question was yeah my main question was who was representing that they were speaking for maker when they first started this partnership because the the vaults were were first spun up and being adverted on Twitter maker governments knew about it I I'm not sure I heard like heard correctly so because you were like cutting off a little bit but so you mentioned they were advertised on on Twitter as make revolts uh before uh like the govern's process is is that correct great yeah they were being teased on Twitter uh in screenshots

before they were even being proposed at maker and so I was just curious who since I know that there there had to have been like some active Partnerships since I know moreo put some of their own money into some of these vaults I'm just curious who on our end was not doing the proper governance procedures because we wake up and suddenly it's a done deal that maker is putting money into Moro and governance is not really informed until after the fact right so to be completely transparent I don't know exactly what's the maker World governance process is but I can tell you how how you know the events like unfolded so essentially like we were're interacting with the block

analytica team and the spark team uh about those vs and then we I think they Deo the the the different markets and then uh they asked about like how do we get those Market seeded and how is the interest rate model working and then we said okay we can just like deploy capital to see that Etc and then I think uh I don't know who tweeted like the the screenshots first um probably someone like from the spark or block analytica team and by the way I'm sorry if I tweeted something that should have been approved by maker governance uh beforehand I have no like to be frank I have very little understanding of like what's the world process look like

uh but uh yeah the answer your question I want want to make sure it answers it correctly yeah and I'm not trying to imply it was a failure on your end it was a it was a failure on hour in um I would ask just to close out this question then we can move on uh do are any of those folks on your cap table are any of them investors in Moro oh no like uh we so we we had like uh two runs of funding uh one is um uh with done in 2021 of $1 million it was co-led by nent and semantic who had a bunch of angels but I don't know I don't think anyone was affiliated with

maker at all and then on the um second run that we did was in 2022 uh co-ed by Anderson oritz and and varant and so at the time to be frank I had no like uh no no relationship at all with anyone from from maker that I know of actually but thank you everyone and I think that that it's that actually expence a lot and we have a question also related to the governance process that we're going to discuss um because of some ideas that b Anica has that's going to come up in

just a bit but it's also good to to give some context prior um well the following question is what are the advantages and disadvantages um that the current morph setup have over just using maker bolts for each of this right so I think uh few things the first thing about Moro so is that you can deploy all those uh different pools that are like immutable with uh two different things you have the uh first the adap curve interest rate model uh we can talk about this as well so the big thing about Isa SD is

that on weekly basis the interest rates are changing like all the time which like generates a lot of like operations frankly like if you want to adapt your interest rates like utilization Etc all the time uh we actually released a a research paper two days ago on maro's uh interest rate uh model and um oh can you still hear me correctly my my airpod just died yeah we can he you yeah good that you know in order to adjust to the uh rates always changing on EA without having to you know do like

always like do some governance stuff that's the the first thing the second thing is that you have the metamorph abstraction which reaggregates liquidity and makes it like super simple to supply into to multiple like liquidation loan to value uh with one uh specific like d uh what's it called again D Frame so especially you you you use maker core like to Min some D into a subd volt and then the volt is able to you know allocate liquidity between the different you know uh risk profiles essentially and so that's like very very flexible and then the last thing is about like a um and I don't know how much I can share

publicly about this on on Moro but uh essentially I mentioned that uh metamor was capable of U aggregating liquidity for lenders and let's just say it can do the same thing for borrowers but it's not live yet so what it means in practice is that if you have two markets that have you know different risk profiles but you want them to share liquidity with one another Well a borrower will be able to um you know essentially access liquidity from all those different markets uh even though they're isolated in principle anyway so that like I guess it sums up like um you know most of it then i' I'd say like morph BL code is like

also like extremely minimalistic it's like 600 lines of code and it's a Singleton right so you can you know move liquidity between the different like loan to value uh very like easily and gas efficiently um yeah I know you'd love to have some much F but I'm sorry I can't show this one um and so like what we've seen very interestingly about like d Loopers is that uh like I mean uh SD Loopers is that they needed to change their adapts to the rate and the risk like very frequently and so in Moro they can do this like through the Singleton implementation like they can migrate their position like extremely efficiently uh from one pool to the other does that make sense

it does it does I don't know if anyone I don't know well this is also a paper question so I don't know if youone would like to to ask something in detail with when it comes to this answer if not we can continue okay um I'm going to go with now then the other questions I'm going to go like back and forth um okay so we were discussing about the and you explaining pretty well about what is isol isolated lending and fragmenting liquidity oh there's a comment here okay um it's not so easy to have everything okay so the next topic that I would like

to to focus on on it's um to give us like more context and to understand way better so regarding the main aspects of um the money market uh we want to go through them one one by one um well maybe not a very extensive but what are the the future your the insights that you see in the future into this and also um I would like to I'll ask you the the next topic as well um about this thing or this issue with the Oracle articles some people are for some people are against so what is your Insight on on this and if you think that

it's possible to replace them based on liquidations through hoops uh like in unisoft for example right um so there's lot in here maybe first about money markets um we've we've built a like2 billion protocol on top of a and this Tau us a lot about what we believe should be enshrined in the money market and what should be externalized and the approach we've taken Mor for is we reduce it to the most simple and the purest Landing engine which is Mor for blue and we externalize what's unnecessary uh to above layers essentially like you can think of it

more as as you know uh Landing but belt in in layers right and the interesting thing about this approach is that there is nothing that you cannot rebuild like all the famous like you know av3 and uh and other implementation like you can uh recreate them with this base primitive metamorpho and and the alpha that I'm not able to share essentially uh which is essentially think of it as shared liquidity for for borrowers um and um I think with this uh design we're able to unlock like levels of liquidity and that are not possible like in in

existing like uh L lending protocols but most interestingly the Paradigm is very different in the sense that you can think of a as a more of a financial product where you deposit your money and and and they are sort of like managing it for you well more BL is like the unopinionated infrastructure on top of which anyone can build their own you know like a like uh pool but what's interesting about it is they all share a common ground which is more for blue Singleton and so to the extent that all those different pools and we have a like we have you know the spark one but we have the gauntlet one we have the uh The Gauntlet ones they have like five or six of them block analytic B protocol um Stak house Financial re7 Etc they all

are building different you know use cases uh and and you know some of them are very different some of them are more risky than another uh but they all share this trust less and efficient common ground which is more for blue and with which they sort of share states with one another to the extent that they share risk and I think this to be frank is a uh like I I I I believe it's completing like 90% of what we expect from defi lending today that said and coming back to your question like what can we do better oracles is obviously like you know a hot topic of uh uh in in defi Landing there is like the AAS of the

worlds that decided to remove oracles from their protocol which I think is a very a is an excellent protocol like very very interesting protocol um where essentially the idea and my take on oracles is that any Ling and borrowing protocol uh needs a notion of pricing at some point to borrow just to evaluate what's the amount of collateral uh that's available but also you know to withd your funds and liquidate and in order to get a pricing you get you need to get a market and so the question is do you internalize that market right uh which is the approach that asna is doing where they literally rebuild an entire Market inside the protocol or um do you

use another external market right which is you know or an oracle whether it's like unisoft directly or you know an aggregation of uh different uh of different markets through like oracles like Chronicle or or chain link Redstone Etc and so there are trade-offs uh between the two options that said I have not seen any orac approach that convinces me in terms of like security and so what I mean by security is the level of complexity you need to get to in order to be able to have a norac system which is entraining an entire Market in the protocol to me is unreasonable um and you know we've

seen it with AA again like I have a ton of respect for what they've done but in practice they had to redeploy their protocol because essentially they had like a vulnerability in the first version it wasn't I don't if I remember correctly it was not a a smart contract vulnerability but an economic vulnerability where you could grief the the protocol essentially so it's it's very hard to build like a resent version um and so I think so that's on one of the downside the other downside is that uh in order to get a pricing from your own Market you need to introduce a lot of latency you know auctions uh which essentially are going to reduce the capital efficiency of uh of those markets and so to that regard oracles are extremely powerful um so so I think

in the current state and and also oracles are improving like oracles are improving in terms of resiliency accuracy Etc gas efficiency for updates and I think that's uh you know I think we should they always get criticized because when there are problems it's often due to orle but I'm hopeful that we can improve orles even further we can decentralize them even further etc etc so yeah and and that's why Mor decided to be Oracle agnostic so we don't you know get to choose one Oracle or the other like a is doing we just let you know lenders decide which Oracle they're comfortable with and you know lend to a market that is priced by this specific Oracle does that make sense uhuh so okay it's it's Oracle agnostic and but you it's not like you

don't it's not like you hate them no it's more like there are some aspects that need to be improved uh for you to say Okay I I like them or I I don't know I trust them yeah I don't think there is like one absolute like solution to the Oracle question there are trade-offs between Oracle and and Oracle you know like Oracle based systems I do think in the current states oracles provide a level of efficiency with a very reasonable like security trade-offs uh that you know makes me lean toward like uh uh having Landing rely on oracles uh being like a very reasonable assumption however I'm hopeful that in the long term oracles

get you know either they reach a level of resiliency that is satisfying or you know they they get replaced by some form of oraculus mechanism but to be frank I have not been convinced by any mechanism so far thank you so much for your Insight on on this topic we really wanted to know now I want to move on to more like maker related so the next question uh it's is there a way with the existing setup to remove the need for um a Multistate control bya governance facilitator so uh which control like

from Moro uh like Moro blue Etc we don't control anything like everything is immutable I I think after building a top of an upgradable protocol I've learned to love immutability and what the guarantees it brings but maybe you're referring to another mtis that I'm not aware of yeah on the on the comment yeah I think that they're want to be more specific details I think they are talking about yes so it says we use a m to loated I to different Ms it right I think you only have to allocate

to the dult though to the to the sorry to the spark Vault right and then spark uh reallocates liquidity within the bounds that have been set by spark to okay so talking about it and please uh add details uh on on the chat to the people are asking but uh there is this I'm not so sure and I would like to know more so spark it's the one that controls the Vault but that's very general like that's controls but what specific do uh spark controls right so so so just for disclaimer like we have like 20

different Vols and morphos I'm not aware of the configuration specifically of all of them um but uh essentially uh my understanding is that they have uh spark volt where D gets the deposited into and so the admin the the admin rights that you have as a volt is the following under a time lock you can uh add a new morphol blue Market to which D can be allocated so essentially metamorph Vol has a white list of all the different markets that they are able to provide funds to in in that case that would be die and they are able to add new markets to the white list and if they do you know propose a new market then there is a Time o and uh and then but I don't know who in practice like is is the

owner uh of that vote like my understanding of like the core plus subow structure and again I'm not you know super familiar with like uh the exact implementation here is that you know maker would mint die into a spark control volt uh but uh I'm to be completely Frank I don't know like the exact like implementation of that by the way paper you can have them the mic no problem it's coming in on chat SP

doesn't really have anything to do with as far as I know but it sounds like it's worth moving well on this space um a very recent one that's the one that was a few weeks ago uh and I asked this because that's what I heard on this bace so run mentioned that the the volts were uh controlled by spark it just like that and didn't specify what which bolts and which in particular were um controlling so that's why that was my question um but I think we're just maybe to to make sure like we're on the same page on the VAB so we have two abstractions we have volts and we have markets volts are the aggregators which can be owned and managed and the markets

are immutable and cannot be manage and so man standing and this is what we put in the moros front end is that spark Dow is is owning the uh uh the Vault yeah I think I think it's an issue on our end again uh so the I think if I if I have your terminology correct we there's like eight markets or whatever 10 markets there's one Vault the vault is on R end controlled by a multisig that's just one of the governance facilitators that really doesn't have anything to do with spark and so my question was if there was a way to like automate that so we don't have to have just a guy in charge of that oh yeah yeah like it's fully configurable like

you can you know uh change the owner you can put a butt instead you know we have different roles in the vault you have the owner uh you have the uh risk manager and you have the allocator so risk manager so owner is like the super admin risk manager is like deciding which Market can be added and then the allocator has the power to move liquidity between those different markets uh and um and those are each of those are configurable and you can change the roles of each and you know put automated in the way you you like oh thank you and also I see that there are comments on the on the chat

thank you B wizer for being here and yeah can give a little bit more clarity but but then again yeah we we do need more uh I don't know like details um but it's it's fine that you could U give us some some light on into this these topics uh there was a topic that was um not exactly as we are talking about right now but still it was like there's at rest okay okay I'm going to go with the next question so it says maker s out as not getting any more for rewards how can maker

become eligible for these and even if maker continues to be excluded how can other bols that utilize die become eligible right so I guess the way we think about rewards in general is that they're an excellent tool to bootstrap markets so when you create a new market you need lenders to get borrowers you need bars to get lenders and it's a chicken and neck problem and you need some Moro you know you need some some kind of initial incentive to boot TR and get the market going right and to to bring together like lenders and Mars and so tokens are such a great way to you know do this job uh and so

this is what we've been doing with Mor for incentives than some other markets not all but uh where there is no way to boot up the markets in a in a in an you know in an efficient way in the case of um makers d3m well there is no such need because you know the d3m is able to automatically allocate a lot of d uh into the the different you know markets and so that's I think that was the initial like rational and also like we to be clear we have like no financial interest in this like we're not earning any any fees in this so I think you know the trade-off uh also can can be that you know maker is able to use all this like you know immutable infrastructure

for free and um so yeah that's I I'd say that's what we would give quote unquote uh to the maker Community um so yeah and so on the other markets question I think in order to be eligible for Mor reward so you can go through a full governance process and just propose it in the morph forum and then uh have the the the mar phers vote for this I'd say the main arguments that we can see is like bootstrapping as a mention uh and then if there is like a rational behind like you know uh I don't know like coin sensorization or or one specific behavior that is great for the network that you know

would be worth incentivizing then I'm sure we can look into it and and vote for it and and yeah and and by the way I think gaunlet has a d Vol and gaunlet is um uh I don't know if they're incentives distributed on this one uh I have no idea um but maybe there is but they they could completely be eligible well thank you and okay I found the the one the one question that I was kind of related to what we were discussing but this is more to the risk parameters so there is a key

issue um and this is from different post uh from the laabs uh that they mentioned they want to reduce the intervention of Risk Managers from uh or governance so they want to make them automatically regulated it like for example like Ashna with h with its innovating innovative mechanism so what do you what is your your Insight in this um do you do you think that this is like possible and viable and this is would be like would improved uh the way it is now if it's automated so I'm not sure I fully get

the question um uh but is the question like that risk management of the metamorph oft owned by Spark the that will eventually be automated is is that the correct like the correct way to yeah it's like like similar to Ashna right so it's not that way it's it's a whole process you have to submit a proposal and then it has to go to Executive um voting and then you know it has like more time of course this will be different if uh it will be automatically regulated right so and and I think you know you could always already have uh this in in in more for without

touching anything so one thing that I think ba Labs has been doing that I think is super interesting is just deploying four different loan to value ratios uh markets and the uh bars are pricing differently the different markets according to the leverage they're able to get there and there is a cap for each of them and sort of like the market is pricing the rich the risk of each of those markets that said you have caps that you know know maybe this is where you have like room for automation uh and you know essentially like regulate those caps um a bit more like smartly I would say to limit like governance intervention and so so I don't know exactly you know it's probably the plan on their end I don't

know exactly what's the uh what they're going to do with this but in general we're big fans about like automating you know and making immuable what can be and you know removing governance from all the complex risk decision is always a good thing in my opinion uh so yeah but I don't have specific insights on ba you know plans or or anything oh okay it's good to know just just to to put it clear um it's like two different things for example uh on the one hand uh they have mentioned that they want to reduce this intervention from governance from Risk Managers uh but on uh on the other hand um

maker wants to hire more risk parameters and it's because if I'm not mistaken this has nothing to do one with the other right because risk is just so complex in general and it has um a lot of um Fields so even if it's like automated and I want to have this clear if it's automated like you would still need like people right um risk parameter like you know not just everything with uh families I I I think that's a very fundamental thing about risk management in general is that risk management is some somewhat about predicting the what's going to

happen in the future and there is no such thing as an algorithm that is able to predict the future at least today and so it inherently requires some kind of like manual intervention because you have to adjust and react to a system well essentially to the world which has like you know infinite number of parameters and so to that regard I think there's inherently things that you can't automate however the way Moro is structured is that risk gets priced uh at at those different markets so the the each market has a risk that is set in stone and and then you know the the lender so in that case uh spark uh you know has to be active and thoughtful

about you know allocating liquidity in one Market uh or the other etc etc yeah that's good to have it like more more clear um now you mentioned about you don't know much about what uh vaps there is one I don't know if you have anything to say about the following um blfs has intimated that 27% return is needed to justify the risk of lending versus defa as assets this is currently beyond the Kink and the utilization curves for all but two volts this Min maker has to Target a return that it's in the highly volatile uh more

than 90% utilization portion of the Cure is there a way directly or via uh work workaround to change the interest rate curves of the existant maker morph volts you like to anything um few things about this so so the interest rate Market of of Mor for blue is ungoverned and general and fully automated so it reacts to the you know Market forces entirely and so there is no such thing as like an update function that you know you can change the rate and uh in in one second Etc all the rules are programmatic and you can you know anticipate what they're going to be etc etc what what maker can do however

is just simply so in order to move the the rate at you target so the the Kink that you're referring to um what maker can simply do is like uh withdraw funds in order to get the rate up and if the rate is up and above utilization targets then the Kink will start to grow uh so that's like one one thing that you can do to get the the rate up Etc and so that's um like essentially the interest rate model in itself isn't govern but reacts to Market forces Market forces are driven by bars and lenders maker is a lender so by withdrawing funds you can you know play with this essentially uh that said so I don't know that that 21% is it for all ltvs I think naturally it would should be different for each lltv

because you know it's different risk premiums so it should be different rates uh like lending against susd at 95% is not the same uh oh weighted average okay interesting so uh it's not the same uh you should theoretically not be the same rate uh and so if you know for some pools that are the more risky it's above and for some pools that are the less risky it's below then it's should probably look fine and then if there is some adjustment to be made then fund has to be withdrawn and by the way like the Vault can simply put it in the nidal market so like just put the die idle without you know having to recall the funds with like the W you know maker

process like you know the the the Vault itself is able to reallocate liquidity to to to play with the rate essentially and so so short answer is yes you can you can move the Kink but not by modifying the code uh just by uh withdrawing liquidity or supplying more liquidity depending on what you want to do and then it will self adjust now we're going to get into a little bit more technical but again I think that right now we're you're explaining it pretty well so I don't think there's going to be like an issue so when we talk about liquidations um there seems to be a

point of innovation in mechanis like uh Lama or un before uh even like hooks like like fluid like instad up um do you have anything to say or or insights into into all this yes so I I do we've been thinking a lot about liquidations uh in general and so you have the liquidation design space is huge uh you have all sorts of auctions um you know Dutch auctions uh based on health Factor based on time English auctions uh you can have like close factors like what a is doing um you have a bunch of you know uh different

designs what is [Music] um one thing is true about all those designs is that there is only one that is the fastest which is the fixed liquidation incentive mechanism and that's you know any other auction you know it's an auction so it takes time to happen so because it takes time price can move right during this time and so you know potentially this is exactly you want liquidation to happen fast in order to limit bad depth and so you know that's uh and and also to maximize like Capital efficiency uh and The Leverage you're able to take and so that's one thing and so but fixed liquidation you know is annoying because when you get liquidated well you you lose a bit of money right and so the

interesting thing is that you can rebuild those all those different auction models like the you know that I was mentioning on top of the uh uh Mor blue protocol and so as a and I think uh summer finance and Def Ser have sort of built some things like this on Moro blue where essentially the idea is the following if your liquidation loan to value is like 80% and you know at 80% there is a I don't know I'm giving random figures like 5% liquidation incentives um well what you can say is at 79% I'm happy to be liquidated uh at half of this right at like only 1% and so you cannot have

those Auto Liquidation you could put a Dutch auction in place like you could say between 78% and 80% I'm going to progressively be liquidated and the more I lean towards 80% well the more the bigger the liquidation incentive is is going to be for uh for the borrow so that that's yeah that's like um I would say like how how we're thinking uh about it the fastest and the most primitive is enshrined in the core protocol and then you know all other auction mechanisms are very opinionated and so it's for bars to decide which one they're going to elect and which one they're going to uh yeah essentially

borrow um use to be liquidated and you could also simply just protect yourself from Liquidation which is another option does that make sense it does it does um so but I think for the next one I want to I am going to copy the question I think it's got to be more more clear um this is a very specific question shout out to jat and okay I put it on the chat right um so on the easy East events so I think the way people should think

about Moro is like unisoft you know in the first hour we deployed Morpho blue we had the first scam markets where if you deploy some liquidity into it you get ruged essentially right and the same thing with unisoft have a bunch of scam tokens I mean front ends do a better job like in unisoft at you know creating which token is a scam which you know token is charging you extra money at every swap uh or those kind of things and um I think it's very important to understand that Mor is very unopinionated about what happens like if some Market gets rugged does not impact any of the other markets is there is like a huge bad debt that gets accured to lenders uh does not impact any of the

other markets so it's like you know each market in Mor BL is have you know is behaving independently from one another then again get reg reaggregated with metamorpho but that's another story uh and so in the case of Easy E um what we had was like gaunlet uh and R7 both of them had a lot of East deposited in some so they had two volts uh depositing into one market into multiple markets but they had they were sharing liquid in one market which was Easy E to borrow e at can't remember the liquidation loan to value and turns out you know it was priced by a redstone Oracle and turns out the Easy E you know depa and so barers that were borrowing from that

market well they got liquidated which is like the expected behavior um especially given that e is you know is like significantly more risky and and uh than you know assets like wbtc for example and uh yeah and and so I think the gaunlet volt uh realized a loss of uh 0.07% of their volt which accounts for like a day of Interest or something so it's like has been widely overstated on Twitter I think and on my on my opinion saying that gantet has done a bad risk management Etc which I think is personally I I think is is unfair uh because you know the volt is yielding

like 30% so of course it does not have the same risk profile as you know a na that is yielding 2% and of course you know some losses can be taken uh you know any product that's you know described as risk-free is really isn't like that's that's not really possible and um yeah and and I think the loss that they took is is pretty minimal regarding what can be improved on Moro um I think two things um I think we should do a better job at explaining that Moro is not like a like Moro is a base impra on top of which anyone can you know do what they want but of course you can do very risky things on Marvel and you can get Burt and I I wish we did

a better job at explaining this and we will continue to improve this whether it's like through you know the way we communicate with people but also in the front ends you know explaining you know what's the deal with all those different markets Etc so that's the first thing second thing is that uh we wish we had those um dut auction like opin dut auction or English auction Etc like mechanism in place at the time for the Liquidators you know at least like an op and tooling that they can use uh if they wanted to because I know some some you know some some liquidation were were quite harsh uh but you know all of this is like very uh solvable and I think the overall impact like for uh for the um the gaunlet V that was you know that was

the main thing that was on Twitter yesterday is that gaunlet had done a a bad job at at r managing I I encourage you to look at their report it's very complete very well written and essentially that you know there's nothing wrong about it it's just everything is behaving as as expected um feel free to let me know if you have any other question on this topic I think that this about like a risk de decisions once is your decision as user okay of course if I have high yield be high the risk going to be higher but sometimes we tend to forget it's like oh wow I'm GNA receive more Rewards or more yield and it's kind of

like an issue that everyone has gone through I think and um and also I was just thinking about this the other day the other day like when we get into crypto and we would start you know like uh I don't know investing in crypto right and having tokens um there's not like a right path and it's not like okay what you should do or you shouldn't do it's more like um you don't even think about your risk profile and it's it sometimes it just of course depends on your own it's like you have to do your own research and you have to listen to the right people but I think there there there we need more of this like I don't know if call it like fin ucation because

that sounds it's mostly because like you know people are used to a which promise is risk like I they're not promising risk- free you know specifically but essentially they're saying they do whatever they can in order to prevent user losses which is a very different Paradigm than a completely permissionless infrastructure on top of which anyone can build the risk they want right um so yeah I I guess that's the the the main thing that uh people need to get used to risk free does not really exist and if we want defy to scale we want to be able to offer different risk and compliance profile to to people and and users will need to have the choice to decide what they want

what risk they want and and you know if they're not able to make this choice on their own then there should be abstraction layers like metamorpho uh in order to you know bring intelligence and and you know activity where passive users are not able to to to be you know active and and sophisticated essentially you you mentioned just just now that everything has G like as you predicted so that means that everything's going um is going well you you you would call this a a success and although it can be say that they're only link uh I mean maker um and Spar

specifically um they can be linked by one asset that is usde and it's variant that it's s um but do you find like New Alternatives or possibilities for for the future to work with with maker right so as I said Morpho blue plus metamorpho plus Al um is able to you know essentially provide you know like the I I don't want to say the same thing because it's like not the same code and everything but very very similar thing is I3 or sparland uh but with a lot of

like additional like advantages uh first like the um you know like the it's it's stupid but just the number of lens of code is much smaller and everything is immutable and when you just look at the number of incidents that happen on like monolithic lending pools over the last you know two years and frankly I've I've been building on top of them just like a nightmare right like so I think this in itself is like a huge uh value proposition and then you have a bunch of like very interesting uh features that you don't have in all those uh existing uh lending and and baring platforms which are per collateral risk for example like each collateral and like each Oracle has its own rate and usually this comes with

fragmented liquidity because it's isolated design but here are the good things that liquidity gets reaggregated so it's like as as if you were adding a new dimension which is how much liquidity can be shared between markets and how much you know you want risk to to you know how how much you want risk to be fungible between different markets essentially if that makes sense uh so yeah so so we're starting with ssde and and usde uh and and you know makers all allocating that into this I I think you know there's potentially a path where you could do more than uh you know as a maker Community could you you you could do more than just those two assets uh you know for example wsds and wbtc on on

sparland have like you know some leverage caps if you have a similar strategy of what ba Labs as proposed with sde you could have wbtc with much higher leverage than what is able on on sparland uh but with a limited cap right for example same thing for uh you know any other asset and then each collateral has its own rate uh which enables you to access markets like lrts uh or you know real world assets and different compliance profile different risk profile so it's overall much more flexible uh but then I'm I'm I'm not the one deciding here and and you know I'm I'm very happy to give like as much uh detail and as much like you know as part of due diligence you know

do whatever we can to to help you through this but I'm confident that uh maker community can transition more and more assets and capture more and more opportunities on on Moro we're about to end uh but I don't want to to miss the chance because you have mentioned about all the the Risk Managers I you mentioned the best Risk Managers in the space building on top of Mora so you have like gaunlet but BL analytica you have uh R7 we have more so we're very interesed to to to know how is the process like how do you select or is there

like we don't get to decide anything that's the cool thing about more like all all of this is like you know completely immutable and permissionless like those are two very important keywords in my opinion in in in Defi and uh and you know anyone is free to deploy the markets they want anyone is free to deploy the vaults they want and offer like their risk management uh uh to to anyone so so yeah and and oh and one thing I didn't mention about Moro is when you know for like the advantages is I mean I sort of mentioned it but is definitely like the shared State between all those markets like for example gaunlet has a DI Vault and um and you know maybe uh some of the markets they

have will be in common with the spark volt and so the spark volt will have increased liquidity that is coming you know uh from from gaunlet and then did not even ask for it but you know they get additional liquidity additional deficiency etc etc so just the idea of every having everything aggregating at one single smart contract which is more for blue like offers this additional flexibility anyway was not the the question uh answer to your question would like it's permissionless yes and the last one I think that this is the one that most most people want to know it's what is the token release oh for

morall um so the token is already generated in live and uh so you have like a nontransferable token that gets distributed so it's like points but with more predictability because you know what share of ownership you you get uh when you you know perform specific actions on the protocol and um and so the token is not transferable right now but can become transferable at some point and um and it's a a function that's deated and so it has to be like voted by governance and frankly like I really want this to be a genuin decentralized process uh in the sense

that um we've been Distributing ownership to users for a year and a half though uh for now so it's been like uh I think users have significant ownership now and uh we have performed rounds of funding so we have investors and we have also contributors that have tokens and I think you know finding the right balance between those three different uh uh pillars and engaging into like up conversation uh is uh something that's needed there is also a legal component to it like you know as you probably know there's a lot of like uh regulations around like uh and you know points of attentions to have when launching a token uh and then finally there is like timing so decentralized legal timing and I think the timing for it is like you

know when Mor enters like a gross stage which it looks like it's entering right now so the I mean the market conditions are favorable uh Moro is is is is growing rapidly and and you know there's a lot of like things going on um so so yeah I guess it's just a matter of like you know getting the the the doubt to to decide on all this and getting like the right legal approval so we we uh uh yeah we can launch the token so I don't have any like specific timeline in mind frankly uh but at least those are the conditions that I consider like necessary in order for the token to be transferable oh that that actually helps

a lot that information that will give us more detail into this we finished with this comment from Anon Builder and it says I don't know if it's very controversial and I don't understand the subject either so I don't know if the question is valid but but I remember there was some post about maker not receiving part of Athena's air drop for having the funds in coin B and that what he they asked if this could be fixed since maker go scw do you want to comment on this do you have any any comments insides I have no idea what this is about uh I know there's like some shards distribution uh I'm sorry some times I

don't have rewards yeah some some kind of rewards no but I'm sure uh yeah I would be surprised if something was you know explicitly distributed and then not operationally disted later on but uh but yeah I don't know to be okay I'm sorry I have to jump so I yeah yeah that that's thank you so much you say 45 minutes and we have done more than so thank you everyone for your participation thank you Paul and see you next week bye-bye everyone thank you bye [Music]