Bridging DeFi Liquidity from Ethereum to Polkadot

Transcript

how good okay welcome everyone um i am cassidy daly i work at centrifuge we're a team that used to mostly be based in berlin but now we're kind of based all over corona either forced us or helped us do that based on your perspective today i'm going to talk about bridging defy liquidity from ethereum to polka dot um specifically i really want to talk about why that's important and then i'll go into a little bit of the how that could work going forward so um i really think interoperability is the key to increasing liquidity in d5 that's sort of my thesis

hopefully i can convince you why that's super important um and maybe prove to you how that's been the case over the last five or so years um so i think the reason why it really matters i think the more connected that chains protocols dapps are the greater this flow of liquidity will be and that's super important that the flow is actually then enabling more growth into the defy ecosystem and some of the reasons why i think this really matters is that as a d5 ecosystem we really want to break the banks not become them and reinvent the wheel here we also want to open up

access to the entire system i think a lot of the reason why d5 started was because people felt marginalized or like they didn't have access to the tools that a lot of other larger businesses or other people might have um i think competition is really essential for our financial system as it exists today to function and that's something that's really lacking in tradify or traditional finance um and there's also a huge issue with pricing the risk and and pricing the interest that is charged to users um for loans for assets um so diving in a little bit more when i say break the banks i i really mean replace the banks get rid of them

create something new not necessarily from ground zero right we don't want to completely reinvent the wheel but we want to do things better than they did and one of those huge things is walled gardens like just the lack of an incentive for a bank to actually care about a new user because they've just got this moat of liquidity around them so it creates a lack of incentives to be efficient or fair and that creates massive inefficiencies in today's traditional financial world this open access is sort of a point within that point a lot of people and small even medium-sized businesses just don't have access to financing from today's traditional

banks and the whole ethos of d5 is to open up this access for absolutely everyone and i think this moat for liquidity these walled gardens also creates a barrier to access for all of these users um competition is really essential within all of this so when you have these sort of moats you're not forced to give users a better price for a loan you're basically the only bank that they can go to and if you say no they're just out of luck and i think a free and a truly free and open system will allow for true competition across services and that will create that will create better like allocation of

resources to find the real price of risk for these assets i think one of the reason why traditional finance could argue back the other way and say you know give a reason as to why they do this it is really hard for them in today's system to devote enough resources to actually finding the price of risk for a small individual it's just not worth it to them it costs too much for the bank to do this but if we had a truly open system it could allow for more and more players to come in even on that side of things and i think that's really where d5 fits into this and i think last they're just diving into this you know accurate pricing element of it um

i think d5 is already really open for the liquidity providers on the one side and we have a lot of people coming in now with capital and d5 liquidity has really skyrocketed in the past few years and on the other hand we don't really have a lot of opportunity for liquidity seekers to really find funding and i think this is something that interoperability can really improve not only allowing you know this this capital on the one side to flow freely but also to be able to allow users to find the lowest cost of capital wherever that happens to be um so one of the ways that we've i think in the ethereum ecosystem really

done an amazing thing here is with standards and creating standards that everyone can use because i think when you have a standard that's when all projects can really be um set from ground zero to be able to be interoperable with each other to have integrations from day one and i think that's super important erc 20 is is one of those first really big standards maybe the best thing since sliced bread and they're really a key building block to the growth of d5 liquidity in the entire ethereum ecosystem and as i said i think it doesn't matter

how good the standard is you know people can argue back and forth about improving the standards that we do have but what matters is that we do have a standard here and i think this has had an enormous impact in the dfi liquidity in the ethereum ecosystem so in 2019 compared to today i mean we've seen exponential growth not only of this total value locked in d5 but the number of projects that have been able to spring up because of how easy it is to integrate with each other that you're able to have you know one protocol interacting with another and compounding the value that's locked in d5 is what's creating this sort of skyrocket here that we can see and i

think that's um something that will continue going further so just you know a little overview of the impact that the erc20 token standard does have um icos of course super exciting um banker coming in in 2017 um dharma uniswap and then this huge d5 summer in 2020 and i think it's really been an endless d5 summer and that's what i'm really excited about is to continue this not only in the ethereum ecosystem but going forward into the polka dot ecosystem and many more to come polka dot speaking from centrifuges experience building there

but i think the real key here is that we're not walling ourselves in any one place to find defy liquidity and that's really what's going to impact it for the end user of our products so i think you know erc20 has really been ethereum's magic weapon i think i would argue and i hope i showed a little bit that it's really been a key to the growth of the ethereum ecosystem as a whole and the d5 ecosystem within that um so ben taking a step back and saying well how do we take this forward what's the next step um how do we make

this a really endless d5 summer with a search for the perfect yield um the standards that we can tackle next i think are cross-chain communication there are a lot of great talks that have happened here at ucc specifically around that and a lot of the work that's going into creating standards there i think interoperable standards on different chains are super important one of the things that's being worked on is nfts and having a standard on every different chain for how those nfts can move from one chain to another fian fiat on and off ramps are super important i think a lot of defy has sort of glossed over that aspect um in the most recent past

but for centrifuge it's a huge deal and something that we really focus on having you know real users at the end of it and i think wallets are also something a standard that has had a lot of growth and is definitely something that can aid to this interoperability um so centrifuge has worked together with chain safe to create a bridge from our centrifuge chain to ethereum and so this is what we use to bridge the default liquidity that exists on ethereum today to the assets that we finance on centrifuge chain so this has been sort of a struggle um to to be honest with you um there's it's really hard to have a

standard here and i think i'm really excited to see the development that happens with bridges going forward for example i saw that near was talking about their rainbow bridge i know that polkadot is working with snowfork to create a standardized bridge there and i think this is something that as an ecosystem i'm hoping to convey is super important this is something that we can't just brush to the side because this is going to be really pivotal in increasing the liquidity and defy as a whole for the entire ecosystem um i think one of the reasons why it's so important is because you really can't do it by yourself this is just an overview of how you could use centrifuge and there's so many

different projects and interactions that happen so you buy eath to pay for gas so that you can mint an nft on centrifuge which today exists on tin lake you lock it up in a centrifuge pool and with that you can borrow dye from maker dow all of these different steps require an integration they require this interoperability then you can swap that die to usdc that fiat on off ramp using pair swap curve one inch and then use circle to convert that to fiat and i think this whole flow touches so many different moving parts in the whole ecosystem and i think every project here at ecc would be able to show a similar sort of image of how many different

layers they're going through how many different projects they interact with so you really can't do it by yourself so centrifuges that's really been one of our focuses is trying to find as many different players in this ecosystem that we can really collaborate with find standards with and i think being a part of the community is just as important as working on our own product in a lot of ways so really trying to develop with other teams out there what these standards can be work together and cooperate even though there might be some competition there underneath it all i think at the end of the day this is really going to help all of us um so this is our tin linked app just

what it looks like today um about 26 million of dye and value locked um and i think that really wasn't possible right without a lot of other projects and integrations out there i think this is super exciting for us and i'm really looking forward to the next step of growing this together with all the other projects in this ecosystem um so i'll just leave it there with a thank you um i don't know if i have any time no if anyone has a burning question maybe i'll take one or two what do you think this integration with

between uh different blockchains and liquidity pools like how do you how does centrifuge think about uh sort of mev in this intersection of security models in liquidity pools world hmm that's a tough question i could ask an easier one or yeah maybe can can do you have an easier one no i feel like that's a longer conversation okay um i mean just to to to put it short i mean there's definitely risks in the system and we try to mitigate that within the centrifuge depth itself so one of the ways that we target that

is having epics in our system so preventing transactions from going through until an epic is over and having all of the transactions come in and then executing a specific order of them and i think it does make it more complex that we're forced to think about these things and create a dap that's able to work around the sort of challenges of of our ecosystem and i think something like bridging will definitely add complexity to that um so hopefully not not more than we can handle i think not i think we'll be able to find a way around it um but it will definitely be a challenge and i think that's where cooperation with other teams is really

key because we're not the only ones thinking about this right and for us to be involved in conversations with everyone else focusing on the same issue is super important that's why we're here at ecc and that's why i love this event so much is being able to have conversations about this sort of stuff and say hey how are you solving this issue or how have you come have you come across this and what how are you thinking about this problem and i think that's super important okay cool i will leave it there thank you everyone you can reach me on twitter there i'll come say hi you